The Republic of Uganda Report of the Auditor

THE REPUBLIC OF UGANDA

REPORT OF THE AUDITOR GENERAL TO PARLIAMENT

FOR THE FINANCIAL YEAR ENDED 30TH JUNE 2018

OFFICE OF THE AUDITOR GENERAL

UGANDA

DECEMBER, 2018

TABLE OF CONTENTS

LIST OF TABLES ...... v ABBREVIATIONS AND ACRONYMS ...... vi GLOSSARY OF TERMS ...... viii FOREWORD BY THE AUDITOR GENERAL ...... ix PART 1: INTRODUCTION AND PURPOSE OF THE REPORT ...... 1 1.1 Introduction ...... 1 1.2 Purpose ...... 1 1.3 Summary of Audit Results ...... 2 1.4 Highlights from Audits Performed ...... 4 PART 2: CONSOLIDATED FINANCIAL STATEMENTS ...... 10 2.1 Opinion of the Auditor General on the Government of Uganda Consolidated Financial Statements of MDAs for the Year ended 30th June 2018 ...... 10 2.2 Report and Opinion of the Auditor General on the Consolidated Financial Statements of District Local Governments for the Year ended 30th June 2018 ...... 23 2.3 Report and Opinion of the Auditor General on the Consolidated Financial Statements Of Municipal Councils for the Year ended 30th June 2018 ...... 31 PART 3: GOVERNMENT MINISTRIES, DEPARTMENTS AND AGENCIES (MDAS) ...... 39 3.1 Summary of Audit Results ...... 39 3.2 Cross – Cutting Issues for Consideration by the Oversight Committees ...... 39 3.3 Sectoral Key Findings ...... 48 3.4 Summary of Audit Results of entities ...... 62 PART 4: COMMISSIONS, STATUTORY AUTHORITIES AND STATE ENTERPRISES ...... 63 4.1 Summary of Audit Results ...... 63 4.2 Financial Performance of Public Corporations and State Enterprises for the Year ended 30th June 2018 ...... 64 4.3 Cross-Cutting Issues for Consideration by the Oversight Committees ...... 74 4.4 Sectoral Key Findings ...... 86 4.5 Summary of Audit Results of Entities ...... 92 PART 5: LOCAL AUTHORITIES/ GOVERNMENTS ...... 93 5.1 Summary of Audit Results ...... 93 5.2 Cross-Cutting Issues for Consideration by the Oversight Committees ...... 94

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5.3 Summary of Audit Results of Specific Entities ...... 102 PART 6: VALUE FOR MONEY ...... 103 6.1 Overview ...... 103 6.2 Definition and Focus of VFM Audits ...... 103 6.3 Key Findings, Conclusions and Recommendations ...... 105 Part 7: SPECIAL AUDIT REPORTS ...... 137 7.1 Summary of Special Audit Results ...... 137 ANNEXURES ...... 140 ANNEXURE 1: OTHER INFORMATION, ACCOUNTING OFFICER’S AND MY RESPONSIBILITIES ...... 140 ANNEXURE II: SUMMARY ENTITY FINDINGS OF MDAS ...... 143 2.1 Adverse Opinions ...... 143 2.2 Qualified Opinions ...... 144 2.3 UnQualified Opinions ...... 157 ANNEXURE III: SUMMARY FINDINGS OF COSASE ...... 183 3.1 Unqualified Opinions ...... 183 3.2 Qualified Opinions ...... 207 ANNEXURE IV: SUMMARY FINDINGS OF LOCAL GOVERNMENTS ...... 214 4.1 Qualified Opinions ...... 214 4.2 Unqualified Opinions ...... 222 ANNEXURE V: REPORTS AND CONSOLIDATED GOVERNMENT OF UGANDA FINANCIAL STATEMENTS .. 283

LIST OF TABLES Table 1: Status of Audit performance for audit year 2018...... 3 Table 2: Summary of Opinions ...... 3 Table 3: Non-deduction and Non-remittance of taxes ...... 43 Table 4: Wasteful/Nugatory Expenditure...... 44 Table 5: Outstanding Receivables ...... 45 Table 6: Untitled/Land/Encroached land/Other Land Matter ...... 46 Table 7: Pending Legal Cases ...... 47 Table 8: Under absorption of project funds ...... 52 Table 9: Details of Management Information systems within JLOS sector ...... 56 Table 10: Un-Consolidated State Enterprises ...... 64 Table 11: Profitability of Enterprises ...... 66 Table 12: Returns on Assets ...... 68 Table 13: Liquidity of Enterprises ...... 70 Table 14: Enterprise Gearing ...... 71 Table 15: Enterprises' ability to service loan obligations ...... 73 Table 16: Corporate governance weaknesses ...... 75 Table 17: Pending Legal Cases ...... 77 Table 18: Wasteful/ Nugatory Expenditure ...... 78 Table 19: Staff Shortages ...... 79 Table 20: Outstanding Receivables ...... 80 Table 21: Noncompliance with statutory deductions ...... 82 Table 22: Land Matters ...... 83 Table 23: Procurement Anomalies ...... 85 Table 24: Non-operational projects ...... 90 Table 25: Summary of Audit Results ...... 93 Table 27: Recoveries for on-going projects for 2015/16-2017/18 ...... 95 Table 28: Status of Medical Equipment ...... 98

LIST OF FIGURES Figure 1: Summary of Opinions ...... 63

ABBREVIATIONS AND ACRONYMS

LIST OF ACRONYMS

ACRONYM DESCRIPTION AG Auditor General AO Accounting Officer Bn Billion BoU Bank of Uganda CAs Contracting Authorities DLB District Land Board FY Financial Year GoU Government of Uganda IESBA International Ethics Standards Board for Accountants IMF International Monetary Fund KIS Kalangala Infrastructure Services MDAs Ministries ,Departments and Agencies MEMD Ministry of Energy and Mineral Development MOFPED Ministry of Finance, Planning, and Economic Development MoGLSD Ministry of Gender Labour and Social Development MoU Memoranda of Understanding MTEF Medium Term Expenditure Framework NAA National Audit Act NBI National Backbone Infrastructure NDP National Development Plan NDPII Second National Development Plan NEMA National Environment Management Authority NGO Non-Governmental Organisation NIN National Identification Number NPA National Planning Authority NWSC National Water and Sewerage Corporation OAG Office of the Auditor General

PAPs Project Affected Persons PDMF Public Debt Management Framework PFMA Public Finance Management Act, 2015 PS/ST Permanent Secretary/Secretary to the Treasury PSST Permanent Secretary and Secretary to Treasury TAI Treasury Accounting Instructions, 2016 TIN Tax Identification Number TWGs Technical Working Groups UCF Uganda Consolidated Fund UGX Uganda Shillings USD United States of America Dollars USMID Uganda Support for Municipal Infrastructure Development WMD Wetlands Management Department YIGs Youth Interest Groups YLP Youth Livelihood Programme

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GLOSSARY OF TERMS

The scientific study of soil management and crop production, including Agronomy irrigation and the use of herbicides, pesticides, and fertilizers. The expenses and commitments incurred by an authorised agency for Classified Expenditure the collection and dissemination of information related to national security interests Cognizant Having knowledge or awareness. A potential liability that may occur depending on the outcome of an Contingent Liability uncertain future event. Domestic arrears refer to short-term debts incurred by governments Domestic Arrears against unpaid procurement invoices for supply of goods and services during the financial year Portion of a country's debt that was borrowed from foreign lenders External Debt including commercial banks, governments or international financial institutions. Serve notice on (a third party) for the purpose of legally seizing money Garnish belonging to a debtor or defendant. An institution that conducts meteorological and hydrological observations Hydromet Stations of weather conditions and the condition of oceans, seas, rivers, lakes, and marshes This is an assessment of a project, program, or policy which looks for Impact Evaluation/ changes in outcome that are directly attributable to that program/ Analysis project/ policy. Nugatory Expenditure Expenditure that does not achieve any result Refers to the process of attracting, screening, selecting, and on boarding Recruitment a qualified person for a job, provided by an employer in another territory and the preparation for their departure. Revolving Fund A fund that is continually replenished as withdrawals are made. The Municipality exhibited outstanding performance on a number of Satisfactory performance parameters used in the assessment tool. Sediments Matter that settles to the bottom of a liquid Refers to the fact that the government cannot be sued without its Sovereign Immunity consent. Studies to determine whether or not the graduates’ specific works Tracer Studies assigned are related to their field of study

viii

FOREWORD BY THE AUDITOR GENERAL

In accordance with my mandate as stipulated under Article 163 of the Constitution of the Republic of Uganda and as amplified by the National Audit Act, 2008, I hereby present to you the Annual Audit Report on the public accounts of Uganda for the financial year ended 30th June, 2018.

This is the second year of reporting in a summarized format where am able to give you a helicopter view of the 1919 reports that I have audited during the year. This report contains my highlights, key findings and crosscutting issues across Ministries, Departments and Agencies, Public Corporations and State Enterprises and Local governments as well as annexure of summaries of my Audit findings. The individual entity reports have been submitted to Parliament separately and give the details.

In 2017, I adopted a thematic approach to audit, and this year chose three areas. I assessed government wide risk and ascertained that an in depth analysis of these areas would provide enhanced information to enable easier constructive oversight by Parliament that would eventually feed into better government performance. The themes chosen were: 1) Budget implementation, 2) Youth Livelihood programme and 3) Public Debt. Issues that need consideration are contained in the report and for Public Debt, I have also issued a separate detailed report.

The highlights in this report will provide you with issues that my audit found to be most pertinent that I considered important to draw to the attention of those charged with governance.

For the first time, the Accountant General produced four sets of consolidated statements for: 1) MDA’s, 2) District Local Governments, 3) Municipal Councils and 4) Performance of State Enterprises and Commission. I have issued opinions on the first three and given an analysis of the information in the fourth consolidated statement.

It is my expectation that the report will enable enhancement of public accountability and will be used to make a difference. Thank you.

John F.S. Muwanga AUDITOR GENERAL Date: 29th December 2018

PART 1: INTRODUCTION AND PURPOSE OF THE REPORT

1.0 Introduction and Purpose

1.1 Introduction I am required by Article 163(3) of the Constitution of the Republic of Uganda and Section 13 and 19 of the National Audit Act 2008 to audit and report on the Public Accounts of Uganda and of all public offices including the Courts, the Central and Local Government Administrations, Universities and Public Institutions of like nature and any Public Corporations or other bodies established by an Act of Parliament.

Section 13 (b) of the National Audit Act 2008 further requires me to conduct the following audits:  Financial audits  Value for money,  Gender and Environment and any other audits in respect of any project or activity involving public funds.  Classified expenditure  Audit of all government investments  Procurement Audits  Audit of the treasury memoranda

Under Article 163 (4) of the Constitution, I am also required to submit to Parliament annually a Report of the Accounts audited by me for the year immediately preceding. I am therefore, issuing this report in accordance with the above provisions. 1.2 Purpose The purpose of this report is to provide;  A summary of audit results for audits done in the year  Report and Opinion of the Auditor General on the  Government of Uganda Consolidated Financial Statements for the year ended 30th June 2018  Annual Consolidated Financial Statements of District Local Governments for the year ended 30th June 2018  Annual Consolidated Financial Statements of Municipal Councils for the year ended 30th June 2018

 Performance highlights of the Auditor General on the Consolidated Summary Statement of Financial Performance of Public Corporations and State Enterprises  Summary of Audit Results of specific entities which include opinions from the audit of Ministries, Departments, Agencies, Commissions, Statutory Corporations and Local Governments.  Sectoral and cross cutting issues/findings, implications and recommendations from the audit of Ministries, Departments, Agencies, Commissions, Statutory Corporations and Local Governments.  Key findings, implications and recommendations from Value for Money and other Special Audit Reports.

The report is arranged in seven parts, namely; Part 1: Introduction and Purpose of the Report Part 2: Opinion on the Consolidated Financial Statements of MDAs and LGs Part 3: Audit results on Government Ministries, Departments and Agencies Part 4: Audit results on Commissions and Statutory Corporations Part 5: Audit results on Local Government Part 6: Audit results on Value for Money Reports Part 7: Audit results on Special Reports

1.3 Summary of Audit Results 1.3.1 General Performance Contained in this report, is a total of 1919 audits, which I conducted and completed during the year. The audits include 1863 financial audits comprising of 168 MDAs, 134 Commissions, Statutory Authorities and State Enterprises, and 1561 Local Governments. I have included 10 Value for Money reports, 18 Specialised/Engineering and 3 IT audit reports. The Engineering Audit reports have been included in the individual entity reports.

The 25 forensic/special reports have been issued to the respective stakeholders who requested them.

Details of the general performance are provided in Table Below.

Table 1: Status of Audit performance for audit year 2018 Audited entities Planned Audits Completed Audit Progress Audits Local Governments 2434 1561 440 Ministries, Departments and 218 168 Agencies Public Corporations and State 113 134 Enterprises Special, IT and Forensics 36 28 6 VFM 12 10 Engineering Audits 6 18 TOTAL 2819 1919

1.3.2 Summary of Opinions

Of the 466 financial audits concluded, 428 (91.8%) entities had unqualified opinions, 37 entities had qualified opinions and 1 entity had an adverse opinion. The table below provides the summary of the Opinions:

Table 2: Summary of Opinions

S/N Entity Category Type of Opinion Total Unqualified Qualified Adverse Disclaimer 1 Ministries, 154 13 1 0 168 Departments, Agencies and Projects 2 Commissions, 125 9 0 0 134 Statutory Authorities and State Enterprises 3 Local Governments 149 15 0 0 164 Total per category 428 37 1 0 466 *This excludes 355 secondary schools and 1042 Lower Local Government audit reports issued during the year.

The details of Opinions for each entity are given in the individual parts of the report relating to financial audits.

1.4 Highlights from Audits Performed Below are brief highlights of my findings, the details of which are in Parts 2 to 6 of this report.

1.4.1 Planning and Budgeting  There were gaps in Government planning and budgeting which affect the timeliness, accuracy and usefulness of plans by Government. The shortcomings include; sector delays to submit plans, lack of service delivery standards in all MDAs and LGs, delay in issuing of circular for NDP III by NPA, failure by NPA to undertake mid-term review assessment of the NPD II, failure by 40 entities to submit strategic plans, failure by 54% of MDAs in attaining satisfactory score on Certificate of Compliance (CoC). As a result most sector plans and annual budgets are not aligned with the NDP and assessing service delivery and level of implementation of the NDP is difficult without service delivery standards and regular reviews.  Out of UGX 28.2trillion government had set out to receive in form of domestic, development partner funding, Treasury Instruments and Appropriation in Aid (AIA) only UGX. 26.6trillion (94.3%) was received leading to a shortfall of UGX 1.6trillion  During the year, government budgeted to spend a total of UGX 30.8trillion, through MDAs, LGs, Referral Hospitals, Missions and embassies. Only UGX26.1trillion was released representing a performance of 85%. This affects implementation of planned activities. 1.4.2 Pension and Gratuity  By close of the financial year, MDAs and LGs had not paid out UGX65.6bn in Pension and gratuity arrears despite the fact that these funds had been released. Funds were thus returned to the UCF. The implication is that either the pensioners are non-existent or MDAs/LGs are denying/delaying beneficiaries their benefits.

1.4.3 Management of Public Debt  Debt has increased by 22% from UGX33.99trillion as at 30th June 2017 to UGX41.51trillion as at 30th June 2018.  Although Uganda’s debt to GDP ratio of 41% is still below the IMF risky threshold of 50% and compares well with other East African countries, it is unfavourable when debt payment is compared to national revenue collected which is the highest in the region at 54%.  50% of the loans sampled totalling UGX 3.98trillion will expire in 2020. If government is to service the loans as projected in the next financial years

(2018/2019 and 2019/2020), it would require more than 65% of the total revenue collections which is over and above the historical sustainability levels of 40%.  Interest payments (domestic and external) during the year amounted to UGX 2.34trillion, which is 17% of total revenue collections, above the limit set in Public Debt management Framework 2013 of 15%. This has been on the rise for the last 4 years.  Although absorption of external debt has improved compared to last financial year, I noted some loans with absorption levels as low as 10% and below. An example is the USMID project with over UGX95bn (95%) still on the various accounts of Municipal Councils by close of year, despite various incomplete and abandoned works due to non-payment to Contractors. Another project, Mbarara-Nkenda and Tororo-Lira transmission line has delayed for almost 8 years resulting into cancellation of the loan by the funder with an undisbursed loan amount of USD 6.5m.  I noted that significant value loans have stringent conditions which could have adverse effects on Uganda’s ability to sustain its debt. These conditions include; waiver of sovereign immunity by government over all its properties and itself from enforcement of any form of judgement, adoption of foreign laws in any proceedings to enforce agreements, requiring government to pay all legal fees and insurance premiums on behalf of the creditor.

1.4.4 Youth Livelihood Program  Whereas Ministry of Gender, Labour and Social Development had budgeted for a total amount of UGX. 231.2 bn for the F/Y 2013/2014 to F/Y 2017/2018, only UGX. 161.1bn (69.7%) was released to the program resulting in a shortfall of UGX.70.1bn (30.3%). As a result only 15,979 (67%) of the proposed 23,850 projects were funded. This affected the number of youths who had been targeted by the program by benefiting only 195,644 out of 286,200 youths, (68%) by 30th June 2018.  From a total amount of UGX.38.8 bn that was disbursed to 5,505 YIGs in the financial years 2013/2014 and 2014/2015, on average, only 26.7% was recovered from the youth countrywide. There is high probability that the balance of almost UGX28.4bn may never be recovered as almost 64% of the sampled projects, consisting of 71% value of loans, were non-existent. Another 25% had reportedly embezzled or diverted the funds.

 In the financial years 2015/16 to 2017/18, out of a total amount of UGX.83.3bn disbursed to 10,444 Youth Groups there was a noted improvement of recoveries ranging from 24% in 2015/16 to 60% in 2017/18 which is still below satisfactory performance.  Out of the total amount of the UGX.18.1bn recovered from the YIGs at the time of audit, UGX.16.1bn (90%) had been transferred to the Revolving Fund in BOU according to the guidelines. Besides, only UGX.8bn had been revolved to other Youth Groups. Delay in revolving funds to other eligible groups undermines the ultimate goal of the program.

1.4.5 Funding for Tax Incentives Because of lack of a proper policy, tax incentives are given to Investors without an accompanying budget. Close of financial year debts for the incentives had grown by 83% to UGX153.6bn up from UGX83.8bn in the previous year.

1.4.6 Payroll and Pension management  Out of the total Government staff establishment of 469,216 positions, only 311,987 positions had been filled leaving a gap of 157,229 representing 34% of vacant posts across MDAs/LGs. This affects service delivery as a majority of these are critical jobs like Doctors, Clinical Officers, Professors, commissioners. Public Universities and Local government districts were most affected.

1.4.7 Management of court awards and compensations  Although government has won many cases in court and has been awarded a total of UGX 20.6bn as at 30th June 2018, this money has not been collected.  Government accumulated liabilities amounting to UGX 655bn in respect of unsettled court awards. As a result of non-payment of these liabilities, some cases had accumulated interest amounting to UGX.124bn for close to 10 years.  During the year under review, I noted that a sum of UGX15.8bn was garnished from three government Agency accounts resulting from Court judgements to creditors. This leads to the suspension of rights to withdraw funds from the affected accounts thus delaying government projects/activities. 1.4.8 Land management issues Significant pieces of land owned by government MDAs, SEs and LGs have either been encroached on, lack titles or are undeveloped. Further, over 2m hectares of forest

cover have been encroached upon with Police, Prisons and NAGRIC land the most affected.

1.4.9 Control and performance of State Enterprises and Corporations  Since 2012, government has made investments in various projects, through Uganda Development Corporation (UDC), amounting to UGX70.1bn. However projects with investments of UGX53.2bn are not operational. The only operational project of KIS with an investment of UGX 16.9bn and 45.7% shareholding by UDC has not declared any profits to UDC since 2012.  I also noted that some assets like Munyonyo Commonwealth Resort, Nile Hotel, Logistics and Tristar Apparels, in which government has ownership have not been taken over for management by UDC. Government could be losing a lot of revenue from these investments.  Out of twenty seven (27) State Enterprises, only 17 (58.6%) made profits during the year. Of the profit-making enterprises, only one entity (New Vision) declared dividends to government. 1.4.10 Suspected Fraud  I noted that UGX.2.3bn had been paid to 6 Apac district officials without any supporting documents. There were also no details on the IFMS (Tier II) payment file to indicate the purpose for the payments. Two staff have so far been interdicted and investigations continue.

1.4.11 Inadequate financial Controls I noted that MDAs and Statutory Authorities continue overriding financial controls which has resulted in Mischarge of expenditure amounting to UGX. 369.8 bn, unaccounted for expenditure of UGX 21.7 bn, wasteful expenditure of UGX 66.9 bn and expenditure on undisclosed domestic arrears amounting to UGX 377.1 bn.

1.4.12 Preparedness by the government of Uganda for the implementation of sustainable development goals (2030 agenda) Whereas government committed itself to implement SDGs Agenda 2030 over the next 15 years from 2016 to 2030, and had formulated the SDGs Coordination framework and launched the SDGs roadmap in 2018, some gaps were noted in the operationalisation of the SDGs framework which pose a challenge in creating a suitable environment for their implementation. The gaps noted included:  Failure by the National Planning Authority (NPA) to guide the review process of SDGs to identify applicable goals and targets, and how they were to be reflected in Uganda’s development policies, strategies, and planning processes, which also affects the ability of the MoFPED to adequately budget and mobilise funds for the implementation of all SDGs.  Low awareness by the Public in regard to SDGs,  Technical Working Groups (TWGs) to steer the SDGs function were not fully constituted, and responsibilities to the various parties in the TWG had not been fully assigned.  UBOS was yet to establish comprehensive baseline data on all applicable targets that would be used to track progress for SDGs implementation.

1.4.13 Management of wetlands in Uganda by the wetlands management department, ministry of water and environment  The roadmap for cancellation of land titles in wetlands approved by Cabinet had not been funded by Ministry of Finance, Planning and Economic Development (MoFPED), and this hindered its implementation.  No evidence was obtained that shapefiles indicating wetland boundaries were being used by Ministry of Lands to prevent further issuance of titles in wetlands.  Whereas government’s aim was to increase intact wetland coverage to 12% by 2020, only 0.3% of the required area had been restored in the 4 years under review, leaving a restoration shortfall of 99.7%. Moreover, degradation continues to outpace restoration, with about 28,261.43 hectares of wetland coverage lost each year, yet only 628.9 hectares were restored on average.  WMD had not gazetted the country’s wetlands. It also failed to utilise all pillars and beacons purchased for demarcation, presenting a risk of potential wastage of the money spent on purchasing the unused pillars and beacons amounting to UGX 662.84m.

 There was unclear delineation of roles, responsibilities and mandates between WMD, NEMA and other key players in regulation and management of wetlands; A review of the legislation to clarify the mandates and roles of the different players was on-going.  WMD had not updated the National Wetlands Inventory since 2000, and had not adequately disseminated knowledge on wetlands to stakeholders to guide decision making.

1.4.14 The regulation of universities by the National Council of Higher Education (NCHE)  Whereas the National Council of Higher Education has undertaken specific interventions aimed at increasing the quality of higher education in universities, inadequate monitoring and conducting of institutional audits, tracer studies and non-establishment of minimum standards of courses of study have resulted in universities having unaccredited and outdated programmes, operating below the required quality assurance and capacity indicators, which has an effect on the quality of higher education.

1.4.15 The Identification and registration of persons by the National Identification and Registration Authority

 There are delays in the processing of applications for registration. Three application strata were assessed, namely: processing of new applications, applications for replacements, and applications for change in particulars. The least delay was experienced for applicants for replacement National Identity cards while the most delay was for new applicants.

PART 2: CONSOLIDATED FINANCIAL STATEMENTS

2.0 CONSOLIDATED FINANCIAL STATEMENTS

2.1 OPINION OF THE AUDITOR GENERAL ON THE GOVERNMENT OF UGANDA CONSOLIDATED FINANCIAL STATEMENTS OF MDAS FOR THE YEAR ENDED 30TH JUNE 2018

THE RT. HON. SPEAKER OF PARLIAMENT

Qualified Opinion

I have audited the accompanying consolidated financial statements of the Government of the Republic of Uganda for the year ended 30th June 2018. These financial statements comprise of the consolidated Statement of Financial Position, the consolidated Statement of Financial Performance, and consolidated cash flow statement together with other accompanying statements, notes, and accounting policies.

In my opinion, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, the financial statements of the government of Uganda for the year ended 30th June 2018 are prepared, in all material respects, in accordance with Section 51 of the Public Finance Management Act, 2015, and the Financial Reporting Guide, 2008.

Basis for Qualified Opinion

 Mischarge of Expenditure – UGX.369,809,626,532

A review of the expenditures revealed that various entities charged wrong expenditure codes to the tune of UGX.369,809,626,532. This practice leads to financial misreporting. Besides, this practice undermines the budgeting process and the intentions of the appropriating authority as funds are not fully utilised for the intended purposes.

 Expenditure on undisclosed Domestic Arrears - UGX.377,104,623,387

Included in the expenditure for the year is UGX.377,104,623,387 that relates to domestic arrears payments which had not been disclosed by several votes. The expenditure was irregularly reported as current year’s expenditure, whereas it relates to previous financial years. This overstated the current year’s expenditure.

• Unaccounted for Advances – UGX.21,650,656,528

Expenditure by various entities amounting to UGX.21,650,656,528, was not accounted for by the time of the audit, contrary to the Public Finance and Accounting Regulations, 2016. In absence of proper accountability, I could not provide assurance as to whether the funds involved were utilised for the intended purposes. Such delays in accounting for funds encourage misuse.

I conducted my audit in accordance with International Standards of Supreme Audit Institutions (ISSAIs). My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statement’s section of my report. I am independent of the Treasury in accordance with the Constitution of the Republic of Uganda (1995) as amended, the National Audit Act, 2008, the International Ethics Standards Board for Accountants (IESBA) Code of Ethics for Professional Accountants (Parts A and B), the International Organization of Supreme Audit Institutions (INTOSAI) Code of Ethics and other independence requirements applicable to performing audits of Financial Statements in Uganda. I have fulfilled my other ethical responsibilities in accordance with the IESBA Code, and in accordance with other ethical requirements applicable to performing audits in Uganda. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my qualified opinion.

Key Audit Matters

Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the financial statements of the current period. These matters were addressed in the context of my audit of the financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters. I have determined the matters described below to be key audit matters communicated in my report.

 Budget performance

Section 45 (3) of the Public Finance Management Act, 2015 states that “An Accounting Officer shall enter into an annual budget performance contract with the PS/Secretary to the Treasury which shall bind the Accounting Officer to deliver on the activities in the work plan of the vote for a Financial year, submitted under section 13 (15)” of the said Act. It has been observed over the years that planned and budgeted for activities of a number of Government entities are not implemented thereby affecting service delivery.

During the overall office wide planning, I assessed risks of inadequate revenue collection, and failure to release budgeted funds that are likely to be the causes of failure to implement planned activities. The focus was put on variance analysis. Consequently, I developed specific audit procedures which included undertaking a variance analysis for revenue and releases and testing the completeness of the reported actual figures. Based on the procedures performed, the following were observed;

a) Overall Revenue performance

Government set out to collect a total of UGX.28.2 trillion in the year under review in terms of URA taxes (Domestic Revenue), Development Partner funding (Loans and Grants), Treasury instruments, and Non-Tax Revenue (NTR). However by the close of the year, Government had collected UGX.27.1 trillion equivalent to 96% of the planned revenue. This resulted into a revenue shortfall of UGX.1.095 trillion (4%). This performance was commendable; however, a lot still has to be done to improve the domestic revenue collection by setting higher targets given that over 40% of the revenue is from borrowing and foreign grants.

Management explained that government has developed a new Domestic Revenue Mobilization (DRM) strategy which is aimed at ensuring greater self-reliance in financing economic development through a broad based and sustainable taxation approach.

I await the implementation of the DRM strategy by government.

b) Non-Tax revenue performance

Government set out to collect a total of UGX.805,419,254,229 in the year under review in terms of Non-Tax Revenue (NTR). By the close of the year, the NTR performance exceeded expectation and stood at UGX.1,157,042,912,405 or 144%. Despite this performance, out of a total of 49 MDAs reviewed, 20 of them failed to collect 50% of their planned NTR. In addition, a number of entities did not include NTR in their budgets and Accounting Officers attributed this to a restriction in the budgeting tool. Accordingly, the high overall collection of NTR of 144% was attributed to collections that had not been budgeted for. This further limits an assessment of their performance since no figures were included in their budgets.

Management explained that the budgeting process for NTR will be further streamlined to eliminate the residual bottlenecks.

c) Supplementary Expenditure

Supplementary budgeting is a mechanism that allows for financing of events and occurrences during the financial year that were not foreseeable or predicted. This was envisaged under Article 156(2) of the Constitution of the Republic of Uganda 1995 (as amended). It is further operationalized by Section 25 of the PFMA 2015 as amended and Regulation 18(6) of the PFM Regulations 2016. Good practice requires that the supplementary expenditure should be unforeseeable, unabsorbable and unavoidable.

It was observed that as of 30th June 2018, a total of UGX.1.7 trillion had been approved as supplementary expenditure. It was however noted that of this amount, expenditure worth UGX.75,361,462,968 could have been either postponed to the subsequent year or absorbed in the current budget. It was also observed that the majority of the supplementary expenditure was for recurrent activities. Some of the incidences that necessitated supplementary expenditures could be attributed to weaknesses in the planning and budgeting processes. The practice may lead to distortions in the expenditure framework and buildup of debt.

Management explained that supplementary expenditure beyond 3% require prior approval by Parliament, hence it is within the jurisdiction of Parliament to reject or approve such supplementary expenditure cognizant of the conditions and purpose for required funds. Government is advised to subject all supplementary requests to rigorous tests to eliminate those that can be postponed or absorbed.

d) Releases of budgeted funds to MDALGs

Government set out to spend a total of UGX.25,597,780,834,222 through MDAs, referral Hospitals, embassies, Local governments and Missions. Analysis of warrants revealed that a total of UGX.21,988,888,156,257 was released representing 86% performance. The shortfall was attributed to shortfalls in revenue collections by Uganda Revenue Authority and undersubscription of domestic debt instruments. A further analysis revealed that out of the released funds, a total of UGX.21,988,865,753,673 was actually spent by the MDALGs representing a 99.9% performance.

Failure to release the budgeted funds to the entities affected implementation of the planned activities and led to build up of arrears. Management explained that releases are in response to available cash resources. I advised government to continue enhancing its revenue mobilisation and collection mechanisms so as to be able to fully provide the amounts appropriated for all MDAs.

 Public debt management

According to the Public Debt Management Framework (2013), Public debt is composed of Public and Publicly Guaranteed debt (PPG). This includes external debt, which is defined as debt denominated in foreign currency, and domestic debt contracted either through direct or indirect borrowing. According to the Audited financial statements for Treasury Operations for the financial year ended 30th June 2017, it was noted that the position of Government Public debt had again increased tremendously in the past three financial years.

It is therefore imperative that acquisition and disbursement of loans are done diligently and proper controls exist to keep the debt sustainability in constant check. During the overall office wide planning, I assessed risks related to public debt in relation to acquisition, disbursement and repayment of public debt.

Based on the above, I considered public debt as a key audit matter. The objective of the audit was to assess whether the acquisition, disbursement and subsequent repayment of all Public debt obtained by the government were in accordance with the laws, regulations, and policies of Government of Uganda, and the development partner’s requirements in the loan agreements. Consequently, I developed specific audit procedures which included the review of the processes, procedures and documentation relating to the acquisition and disbursement of debt, analyzing the debt performance of the government including confirming whether debt principal and interest are duly paid, and analyzing information on the debt management system for accuracy, completeness and consistency and reviewing the debt sustainability indicators of government vis-à-vis best practice as well as making comparisons to countries in the region.

Based on the procedures performed, I observed the following;

a. According to the Public Debt Management Framework (PDMF), Public debt is composed of external debt (Debt denominated in foreign currency) and domestic debt (stock of shilling denominated liabilities). The definition, however, excludes domestic arrears, pension liabilities which are on the rise across government. The total disbursed debt has increased by 22% from UGX.33.99 trillion as at 30th June 2017 to UGX.41.44 trillion as at 30th June 2018.

b. There are a number of stringent loan conditions in the loan agreements signed by the Government of Uganda and these have further increased the cost of borrowing and at times expose Uganda’s sovereignty to risk.

c. There has been a huge increase in onlent loans to parastatals from UGX.431 billion in 2015/16 to UGX.4,634 billion in 2017/18 representing a 975% increment; however, this is happening in the face of failure by parastatals to repay loans earlier onlent. There is likelihood that the financing instruments being used are not appropriate for some parastatals.

d. An assessment of Uganda’s debt sustainability revealed that though Uganda compares well with other countries in the debt to GDP ratios, it fares poorly in interest to revenue and debt repayment to revenue ratios. This is largely due to the low tax to GDP ratios suffered by Uganda. As a result, Government is heavily relying on rolling over domestic debt.

e. Government does not have a clear strategy that would protect the country against foreign exchange risk as a result of debt dominated in foreign currency. In the year under review, there was an exchange loss of UGX.2.4 trillion resulting from the translation of foreign denominated loans.

In response, Government has committed to addressing the above shortcomings by increasing efforts to collect domestic revenue, cutting back on short term domestic borrowing, initiating policies to support import substitution and export promotion, developing policies to deal with foreign exchange risk as well as developing new guidelines for loan negotiations. This is in line with the recommendations I have made to government. I await the outcome of this commitment

Emphasis of Matter

Without qualifying my opinion further, attention is drawn to the following additional matters which have also been disclosed in the financial statements;

 Contingent Liabilities – UGX.9.4 trillion

As disclosed in the statement of contingent liabilities, Government contingent liabilities have increased to UGX.9.4 trillion up from UGX.7.5 trillion reported in the previous year. The trend appears unsustainable in the event that a significant percentage crystallizes into liabilities.

 Classified Expenditure

As disclosed under note 8, a total of UGX.757 bn relates to classified expenditure. In compliance with Section 24 of the Public Finance Management Act, 2015 (Classified

Expenditure), this expenditure is to be audited separately and a separate audit report issued.

Other Matter

I consider it necessary to communicate the following matters other than those presented or disclosed in the financial statements;

 Expenditure off the IFMS

The government of Uganda introduced the IFMS with a core objective of ensuring accurate, reliable and complete financial information for Government Ministries, Departments, Agencies and Local Authorities as well as an increase in the transparency of public spending. From a sample of 7 Ministries and Agencies which are on the IFMS, it was observed that 6 entities still send huge block figures outside the system after charging expenditure codes on the system; however, the ultimate expenditure cannot be restricted to what was charged. It was also noted that a number of entities post these funds to commercial bank accounts a practice that was stopped many years back. This practice exposes such funds to a risk of misuse.

The Accountant General explained that the identified expenditures are transfers made to regional offices where IFMS is not yet deployed. Progress is being achieved in rolling out IFMS to regional offices of entities. I advised the Accountant General to expedite the roll out so as to mitigate the exposure to risk of abuse.

 Weaknesses in the E–Cash payment platform

GOU has implemented wide-ranging Public Financial Management (PFM) reforms geared towards ensuring efficient, effective, transparent and accountable use of public resources as a basis for improved service delivery. These reforms have provided the foundation for improved transparency and accountability in public financial management process, however, one of the challenges that still exists is the management of cash transactions in government entities.

To further strengthen the management of cash transactions, Government acquired an e- cash solution to enable MDALGs efficiently process cash payments directly to beneficiaries without going through employee personal accounts. The objective of adopting e-cash system was to mitigate the risk associated with cash advances to employee personal accounts. The system is used by MDAs to effect one-time payments to mobile money accounts of persons not employed by the MDA.

A review of the system revealed major weaknesses in the controls which are likely to undermine the attainment of the stated objectives. It was noted that funds could be sent to bank accounts rather than mobile money, non-individual beneficiaries can be set up, multiple payments can be made to individual beneficiaries in the same seating and there was no cap on the amounts that can be sent.

As a result of the above weaknesses, I noted that payments were made to employee accounts instead of third parties, huge sums of money were transferred in single transactions to a beneficiary through the system and multiple payments were made to the same beneficiaries on the same day.

If the system weaknesses are not plugged, the intended objectives of the system may not be achieved as it appears to be creating a parallel payment platform to the IFMS. I have advised the Accountant General to consider strengthening the controls embedded on the system as it rolls it out to other MDAs.

 Leased data and Internet Services for IFMS from private entities

Section 4 (a) of the NITA-U Act provides that NITA-U shall provide internet services to the government. In addition, regulation 10 of the NITA-U (E-government) regulations provides that all public bodies shall use the NBI and electronic government infrastructure as the primary vehicle for all government data, internet and voice services.

I noted that the Ministry of Finance entered into contracts and continues to lease data and internet related services for its IFMS sites from private entities and pays them directly. In the year under review, a total of UGX.2,381,843,130 was paid to various local companies for the data communication. Interaction with NITA(U) revealed that their service to IFMS in the year under review had a 99% uptime, their coverage is countrywide and the current Rural Communication Infrastructure Project funded by the World Bank was to provide last mile connectivity to all major installations in the country. I noted that NITA(U) provides connectivity using the budget already availed to it through appropriation. The continued solicitation of services from private data providers is wasteful as the funds could be used to expedite last mile connection to the national backbone where needed.

Management in their response stated that the National Backbone Infrastructure (NBI) that is provided by NITA (U) has been adopted as the main link in all the sites within Kampala. The adoption of the NBI at other sites is ongoing and the roll out exercise has a target completion date of 31st March 2019 for sites where NITA-U link is accessible such as IFMS

sites. The second link, which is by a telecom company, will only be maintained for emergency purposes only at negotiated rates for IFMS regional centres.

I await the conclusion of this management initiative.

 Conflict between Loan Agreement, Power Purchase Agreement and Generation and Sale License

Article 3.1 and Appendix 1-A (11) of the loan agreements between GOU and the financing Bank for the construction of Isimba HPP and Karuma HPP requires UEGCL to enter into a power purchase agreement (PPA) with Uganda Electricity Transmission Company Ltd (UETCL) on a take or pay basis (also known as capacity payment). Part IV of the power purchase agreements signed between UEGCL and UETCL in relation to Karuma and Isimba respectively, and approved by EXIM Bank requires UETCL to make capacity payments to UEGCL. Under the capacity payment method, the purchaser is required to pay for the entire available capacity of the hydropower facility.

The government of Uganda guaranteed the above agreement between UETCL and UEGCL, implying that in case UETCL fails to pay, Government of Uganda would bridge the gap.

Contrary to this arrangement, it was noted that clause 6 and Annex D (2) of the generation and sale licenses issued by the Electricity Regulatory Authority (ERA) to UEGCL in relation to Karuma and Isimba authorises UEGCL to only charge UETCL an Energy charge. Under the energy charge method, the purchaser is only required to pay for energy consumed, as measured by a meter. The purchaser is not required to pay for the available energy that it does not consume.

UEGCL charging UETCL an energy charge and not requiring capacity payment implies flouting of the power purchase agreement and would require Government of Uganda through the Ministry of Finance to bridge the gap. Indeed the Solicitor General’s advice dated 14th September 2018, forwarded to ERA by UEGCL, recommended for the amendment of the generation license to harmonize with the PPA and credit loan agreement. This has not been undertaken up to date. I advised the PS/ST to ensure that the license is harmonized with the agreements as advised by the Solicitor General to avoid crystallization of the guarantee.

Other Information

The Accounting Officer is responsible for the other information. The other information comprises the statement of responsibilities, statement from the Hon. Minister of Finance, Planning and Economic Development, statement from the Secretary to the Treasury, statement from the Accountant General, and other supplementary information. The other information does not include the financial statements and my auditors’ report thereon.

My opinion on the financial statements does not cover the other information and I do not express an audit opinion or any form of assurance conclusion thereon.

In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially consistent with the financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard.

Responsibilities of Management for the Consolidated Financial Statements

Under Article 164 of the Constitution of the Republic of Uganda, 1995 (as amended) and Section 45 of the Public Finance Management Act, 2015, the Accounting Officers are accountable to Parliament for the funds and resources of the Government of Uganda.

The Accountant General is appointed as the Accounting Officer and Receiver of Revenue for the Consolidated Fund. The Accountant General is therefore responsible for the preparation of financial statements in accordance with the requirements of the Public Finance Management Act 2015, and the Financial Reporting Guide, 2008, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error.

In preparing the financial statements, the Accountant General is responsible for assessing the Government’s ability to continue delivering its mandate, disclosing, as applicable, matters related to affecting the delivery of the mandate of the Government of Uganda, and using the Financial Reporting Guide 2008 unless the Accountant General has a realistic alternative to the contrary.

The Accountant General is responsible for overseeing the Government’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

My objectives are to obtain reasonable assurance about whether the consolidated financial statements of government as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISSAIs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISSAIs, I exercise professional judgment and maintain professional skepticism throughout the audit. I also;

 Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the government’s internal control.

 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

 Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the government’s ability to deliver its mandate. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the government to fail to deliver its mandate.

 Evaluate the overall presentation, structure, and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves a fair presentation.

I communicate with the Accounting Officer regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

I also provide the Accounting Officer with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with him/her all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards.

From the matters communicated with the Accounting Officer, I determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. I describe these matters in my auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Reporting Responsibilities

In accordance with Section 19(1) of the National Audit Act (NAA), 2008, I report to you, based on my work described on the audit of the GoU Consolidated Financial Statements that;

 Except for the matters raised in the compliance with legislation section below, and whose effect has been considered in forming my opinion on the GoU consolidated financial statements, the activities, financial transactions and information reflected in the consolidated financial statements that have come to my notice during the audit, are in all material respects, in compliance with the authorities which govern them.

REPORT ON THE AUDIT OF COMPLIANCE WITH LEGISLATION

In accordance with Section 13 of the NAA, 2008, I have a responsibility to report material findings on the compliance of Treasury management with specific matters in key legislations. I performed procedures to identify findings but not to gather evidence to express assurance.

The material findings in respect of the compliance criteria for the applicable subject matters are as follows;

 Government Commitments beyond Appropriation and off the IFMS

Section 21(2) of the Public Finance Management Act 2015, states that a vote shall not take any credit from any local company or body unless it has no unpaid domestic arrears from a debt in a previous financial year, and it has the capacity to pay for the expenditure from the approved estimates as appropriated by Parliament for that year.

A review of the consolidated financial statements revealed that for 27 entities, their total expenditures plus new commitments for the year exceeded the appropriation for the year by a total of UGX.363,791,707,071. This implies that the Accounting Officers committed votes beyond the appropriation which contravenes the requirements under the Act. I observed that the IFMS has controls to avoid commitments beyond appropriation, implying that the commitments were done outside the IFMS system. The continued circumvention of budget controls leads to further accumulation of domestic arrears.

Management acknowledged that in some cases, commitments outside of the IFMS were done in breach of existing guidelines on committing government. But in other cases, the breach is unavoidable where the commitments arise from outside the organisation such as court awards. Management noted that the MTEF funding has been enhanced effective 2018/19 to clear all verified arrears progressively up to 2021/22 as per the Domestic Arrears Strategy. New measures will also be undertaken for cases of errant Accounting Officers who commit Government beyond the budget without justifiable reasons. I await the outcome of management’s commitment.

John F.S. Muwanga

AUDITOR GENERAL KAMPALA 27th December, 2018

2.2 REPORT AND OPINION OF THE AUDITOR GENERAL ON THE CONSOLIDATED FINANCIAL STATEMENTS OF DISTRICT LOCAL GOVERNMENTS FOR THE YEAR ENDED 30TH JUNE 2018

THE RT. HON. SPEAKER OF PARLIAMENT Opinion I have audited the consolidated financial statements of Local Governments Districts which comprise the consolidated Statement of Financial Position as at 30th June 2018, and the consolidated Statement of Financial Performance, consolidated Statement of Changes in Equity and consolidated statement of Cash flows together with other accompanying statements for the year then ended ,and notes to the consolidated financial statements, including a summary of significant accounting policies.

In my opinion, the consolidated financial statements of Local Governments for the year ended 30th June 2018 are prepared, in all material respects in accordance with section 51 of the Public Finance Management Act, 2015 and the Local Government Financial and Accounting Manual, 2007.

Basis for Opinion I conducted my audit in accordance with International Standards of Supreme Audit Institutions (ISSAI), and the National Audit Act 2008. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of my report. I am independent of the Local Governments Districts in accordance with the Constitution of the Republic of Uganda (1995) as amended, the National Audit Act 2008, the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to my audit of the consolidated financial statements in Uganda, and I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Key Audit Matters

Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the Consolidated Financial Statements of the current period. These matters were addressed in the context of my audit of the consolidated financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters. I have determined the matters described below as key audit matters to be communicated in my report;

 Performance of Youth Livelihood Programme.

The Youth Livelihood Programme (YLP) is a Government Programme being implemented under the Ministry of Gender, Labour and Social Development (MoGLSD) through the Local Government Administrations. The programme, which started in the financial year 2013- 2014, was to respond to the existing challenge of unemployment among the Youth. The programme is implemented through the District and support to the vulnerable youth in form of revolving funds for skills development projects and income generating activities.

The audit focused on an amount of UGX.32.9 bn disbursed to 105 Districts in the Financial Years; 2013/2014 and 2014/2015 whose recovery period of three years had expired by 30th June 2018. The audit procedures performed included ascertaining the following;

 Whether all funds budgeted for YLP during the period under review were actually released and used only for the program.  Whether all funds advanced to the youth groups were repaid in accordance with the agreed repayment schedule and to establish reasons for failure or delays to repay the funds.  Whether all funds recovered during the period under review were transferred to the revolving fund account in Bank of Uganda and  Whether on a sample basis the funded projects exist and are operating.

I made the following observations; a. Underfunding of the Programme.

A review of the approved budget for the YLP program revealed that whereas the Districts had budgeted for a total amount of UGX. 35.2bn for the financial years 2013/2014 and 2014/2015, only UGX. 32.9bn was released resulting in a shortfall of UGX. 2,381,248,643. As a result only 15,979 (67%) of the proposed 23,850 projects were funded. This affected the number of youths who had been targeted by the program by benefiting only 195,644 out of 286,200 youths, (68%) by 30th June 2018. This undermined the intended objective of responding to the challenge of unemployment amongst the Youths.

The Accounting Officers mainly attributed this to budget cuts by the Ministry of Gender, Labour and Social Development (MGLSD) which has the final say in this programme.

I advised the Accounting Officers to continuously engage the MGLSD to ensure success of the programme. b. Low recovery of Youth Livelihood Funds

I observed that whereas the groups funded in 2013/2014 and 2014/2015 were expected to have repaid a total amount of UGX.33.6 bn (Interest inclusive) by close of the financial year 2017/2018, only UGX.8.3 bn (24.7%) was collected leaving a balance of UGX.27.4 bn (75.3%).

Physical inspection was carried out on two selected projects per district (2013/2014) to ascertain whether they were in existence and executed in accordance with the operational guidelines. Out of the 172 inspected projects, only 63 projects were in existence (36%) while 109 projects were nonexistent.

Failure to repay in a timely manner implies that other eligible groups were unable to access the funds since this is a revolving fund.

projects due to bad weather patterns (10%) and other reasons including lack of skills, Sensitization and insecurity (22%).

I advised Accounting Officers to seek for a lasting solution with all stake holders in order to address the challenge of youth unemployment.

c. Failure to transfer recovered funds to the recovery account in BOU.

A review of the bank statements of YLP collection accounts revealed that out of the recovered amount of UGX.8.3 bn from 105 districts, UGX.6.9 bn had been transferred to the National Revolving Fund Collection Account by the end of the financial year 2017/18. However the balance of UGX.1.4bn had not been transferred. This undermines the effective implementation of the program. The Accounting Officers attributed this to the slow recovery rates and failure to allocate some recoveries to individual groups. I advised the Accounting Officers to follow the programme guidelines in order to achieve the project objectives.

 Implementation of the Uganda Road Funds Section 45 (3) of the Public Finance Management Act, 2015 states that “ An Accounting Officer shall enter into an annual budget performance contract with the PS/Secretary to the Treasury which shall bind the Accounting Officer to deliver on the activities in the work plan of the vote for a Financial year, submitted under section 13 (15)” of the said Act.

Regulation 18(3) of the Local Government Financial and Accounting regulations, 2007 requires budget estimates to be based on objectives to be achieved for the financial year and during implementation, effort to be made to achieve the agreed objectives or targets as per the programme of Council.

It has been observed over years that planned and budgeted for activities of a number of Local Governments are not implemented thereby affecting service delivery.

During the overall office wide planning, I identified risks such as inadequate release of funds and failure to undertake budget monitoring and supervision that are likely to be the causes of failure to implement the planned activities under Uganda road fund. The

focus was put on the planned major outputs under Uganda Road Fund which greatly impact on service delivery in the Local Governments Districts.

Consequently, I developed specific audit procedures which included to ascertain whether;  The budgeted URF releases for Local Governments for the year under review were actually received ;  The planned URF outputs were achieved;  The monitoring and supervision was carried out by reviewing reports to assess performance. Based on the procedures performed, the following observations were made;

a) Budget performance

A total of UGX.55.1bn was budgeted to cater for routine manual maintenance, routine mechanised maintenance, periodic maintenance and emergency activities on several District roads using Road gangs and the force Account mechanism. However, the Districts received UGX.55.3bn resulting into an excess of UGX. 0.16bn. The excess constituted 0.3% of the budgeted amount.

b) Status of implementation

A review of planned outputs against actual performance revealed the following;  A total of 26,883.28 kms at an estimated cost of UGX.13bn was planned to be undertaken under routine manual maintenance. Audit noted that 20,487.29 kms (76%) were actually undertaken at a cost of UGX.10.1bn (77%).  A total of 7,006.82 kms at an estimated cost of UGX.16.2bn was planned to be undertaken under routine mechanised maintenance. Audit observed that 6,698.9 kms (96%) were actually undertaken at a cost of UGX.15.8bn (97%).  A total of 1,619.1 kms at an estimated cost of UGX. 9.7bn was planned to be undertaken under periodic maintenance. However, audit noted that 1,828.8 kms (113%) were actually undertaken at a cost of UGX.10.3bn (106%).

c) Field Inspections

Inspection carried out in 115 Districts revealed unsatisfactory and incomplete works in 31(27%) Districts as shown in the individual entity reports. The Accounting Officers attributed this to heavy rains and floods, failure to attract road gangs, budget cuts and high unit cost per kilometre.

I advised the Accounting Officers to engage relevant authorities to revise the funding model that suits the different localities.

Emphasis of Matter Without qualifying my opinion, I draw attention to the following matters presented in the financial statements.

 Unpaid Pension and Gratuity Arrears Districts had not paid pension and gratuity arrears totalling to UGX.20.7bn by the end of the financial year as disclosed in note 24 of the consolidated Financial Statements for the year ended 30th June 2018. The unpaid pension and gratuity negatively impacts on the well-being of the retired civil servants. The Accounting Officers attributed this to delayed access to the pension payroll.

I advised the Accounting Officers to follow-up the matter with the MoFPED and Ministry of Public Service to expedite the verification process and have the pension and gratuity arrears payments effected.

 Inadequate Controls Surrounding Management of Payables I observed that payables increased from UGX.43.7bn to UGX.104.1bn as disclosed in the consolidated statement of financial positions for District Local Governments. The accumulation of payables may lead to litigation and payment of fines and penalties. I advised the Accounting Officers to observe the commitment control system and to settle outstanding payables.

 Arrears of Revenue Disclosed in the consolidated statement of Arrears of Revenue is UGX.10.8bn accumulated revenue arrears which have increased by 58% up from UGX.6.8bn reported in the previous

year. Money owed to Councils represents an idle asset as it denies them the opportunity of using the money to provide services promptly. I advised the Accounting Officers to initiate measures to recover the outstanding amounts.

 Contingent Liabilities Disclosed in the Consolidated Statement of Contingent Liabilities on page 32 of the Consolidated Financial Statements of the Local Governments is a contingent liability of UGX.2.4bn. These are as a result of legal proceedings lodged against the Districts. This appears unsustainable in the event that a significant percentage crystallizes into liabilities. I advised the Accounting Officers to explore the causes of the accumulation of contingent liabilities with a view of curtailing further increment.

 Funds not accounted for An amount of UGX. 1.1bn included in the expenditure figures of the consolidated financial statement lacked supporting documents at the time of Audit. Consequently, I was unable to confirm that the funds were utilised for the intended purposes. I advised the Accounting Officers to ensure that the funds are properly accounted for or else effect recovery from the responsible officers.

Other Matter In addition to the matters raised above, I consider it necessary to communicate the following matter other than those presented or disclosed in the financial statements:

 Local Revenue Performance Regulation 32 of the Local Governments Financial and Accounting Regulations, 2007 requires Councils to ensure collection of all budgeted revenue in an approved manner and the revenue banked intact in Council accounts. A review of revenue performance revealed that districts budgeted to collect UGX.18.6bn. However only UGX.11bn (59%) was released leading to an under collection of UGX.7.6bn (41%). Under collections negatively affect implementation of planned activities. This was attributed mainly to challenges in revenue collections from tax parks, creation of new entities draught and natural calamities.

I advised the Accounting Officers to enhance the sensitisation of tax payers on tax compliance and to develop other strategies to enhance revenue collections.

Details of other information, Accounting Officers and my responsibilities are included in Annexure 1.

Other Reporting Responsibilities In accordance with Section 19 (1) of the National Audit Act, 2008, I report to you, based on my work described on the audit of Financial Statements, that the activities, financial transactions and information reflected in the financial statements that have come to my notice during the audit, are in all material respects, in compliance with the authorities which govern them.

John F.S. Muwanga AUDITOR GENERAL KAMPALA

22nd December, 2018.

2.3 REPORT AND OPINION OF THE AUDITOR GENERAL ON THE CONSOLIDATED FINANCIAL STATEMENTS OF MUNICIPAL COUNCILS FOR THE YEAR ENDED 30TH JUNE 2018

THE RT. HON. SPEAKER OF PARLIAMENT Opinion I have audited the consolidated financial statements of Municipal Councils which comprise the consolidated Statement of Financial Position as at 30th June 2018, and the consolidated Statement of Financial Performance, consolidated Statement of Changes in Equity and consolidated statement of Cash flows together with other accompanying statements for the year then ended ,and notes to the consolidated financial statements, including a summary of significant accounting policies.

In my opinion, the consolidated financial statements of Municipal Councils for the year ended 30th June 2018 are prepared, in all material respects in accordance with section 51 of the Public Finance Management Act, 2015 and the Local Government Financial and Accounting Manual, 2007.

Basis for Opinion I conducted my audit in accordance with International Standards of Supreme Audit Institutions (ISSAI), and the National Audit Act 2008. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of my report. I am independent of the Municipal Councils in accordance with the Constitution of the Republic of Uganda (1995) as amended, the National Audit Act 2008, the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to my audit of the consolidated financial statements in Uganda, and I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Key Audit Matters Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the Consolidated Financial Statements of the current period. These matters were addressed in the context of my audit of the consolidated financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters. I have determined the matters described below as key audit matters to be communicated in my report;  Performance of Youth Livelihood Programme. The Youth Livelihood Programme (YLP) is a Government Programme being implemented under the Ministry of Gender, Labour and Social Development (MoGLSD) through the Local Government Administrations. The programme, which started in the financial year 2013-2014, was to respond to the existing challenge of unemployment among the Youth. The programme is implemented through the District and support to the vulnerable youth in form of revolving funds for skills development projects and income generating activities.

The audit focused on an amount of UGX.1,6Bn disbursed to 17 Municipal Councils in the Financial Years; 2013/2014 and 2014/2015 whose recovery period of three years had expired by 30th June 2018. The audit procedures performed included ascertaining the following;

I made the following observations;

a. Underfunding of the Programme.

A review of the approved budget for the YLP program revealed that whereas the Municipal Councils had budgeted for a total amount of UGX.1.7bn for the financial years 2013/2014 and 2014/2015 , only UGX.1.6bn was released resulting in a shortfall of UGX.17,971,000.

This undermined the intended objective of responding to the challenge of unemployment amongst the Youths. The Accounting Officers mainly attributed this to budget cuts by the Ministry of Gender which has the final say in this programme.

I advised the Accounting Officers to continuously engage the ministry of gender to ensure success of the programme.

b. Noncompliance with the repayment schedule

It was observed that whereas the groups funded in 2013/2014 and 2014/2015 were expected to have repaid a total amount of UGX.1.8bn (Interest inclusive) by close of the financial year 2017/2018, only UGX0.44bn (24.9%) was collected leaving a balance of UGX.1.3bn (75.1%). Physical inspection was carried out on two selected projects per Municipal Council to ascertain whether they were in existence and executed in accordance with the operational guidelines. Out of the 26 inspected projects, only 6 projects were in existence while 20 projects were non-existent.

Failure to repay in a timely manner implies that other eligible groups were unable to access the funds since this is a revolving fund.

According to the Accounting Officers, delayed repayment was mainly attributed to disintegration of groups and sharing of funds by members (45%), embezzlement of funds by group members (23%), failure of some projects especially agriculture projects due to bad weather patterns (10%) and other reasons including lack of skills, Sensitization and insecurity (22%).

I advised Accounting Officers to seek for a lasting solution with all stake holders in order to address the challenge of youth unemployment.

c. Failure to transfer recovered funds to the recovery account in BOU.

A review of the bank statements of YLP collection accounts revealed that out of the collected amount of UGX0.44bn only UGX0.4bn was transferred to the National Revolving Fund Collection Account by the end of the financial year 2017/18 leaving a balance of UGX0.079bn. This undermines the effective implementation of the program. The Accounting Officers attributed this to the slow recovery rates and failure to allocate some recoveries to individual groups.

I advised the Accounting Officers to follow the programme guidelines in order to achieve the project objectives.

 Implementation of the Uganda road Funds

Section 45 (3) of the Public Finance Management Act, 2015 states that “ An Accounting Officer shall enter into an annual budget performance contract with the Secretary to the Treasury which shall bind the Accounting Officer to deliver on the activities in the work plan of the vote for a Financial year, submitted under section 13 (15)” of the said Act.

Regulation 18(3) of the Local Government Financial and Accounting regulations 2007 requires budget estimates to be based on objectives to be achieved for the financial year and during implementation, effort to be made to achieve the agreed objectives or targets as per the programme of Council.

It has been observed over years that planned and budgeted for activities of a number of Municipal Councils are not implemented thereby affecting service delivery.

During the overall office wide planning, I identified risks such as inadequate release of funds and failure to undertake budget monitoring and supervision that are likely to be the causes of

failure to implement the planned activities under Uganda road fund. The focus was put on the planned major outputs under Uganda Road Fund which greatly impact on service delivery in the Municipal Councils.

Consequently, I developed specific audit procedures which included to ascertain whether;  The budgeted URF releases for Local Governments for the year under review were actually received ;

 The planned URF outputs were achieved;  The monitoring and supervision was carried out by reviewing reports to assess performance. Based on the procedures performed, the following observations were made;

a) Budget performance

A total of UGX.24.4bn was budgeted to cater for routine manual maintenance, routine mechanised maintenance, periodic maintenance and emergency activities on several Municipal roads using Road gangs and the force Account mechanism. However, the Municipalities received UGX.24.5bn (resulting into an excess of UGX.112,625,251 . The excess constituted (0.5%) of the budgeted amount.

b) Status of implementation

A review of planned outputs against actual performance revealed the following;  A total of 2,229 kms at an estimated cost of UGX.2.6bn was planned to be undertaken under routine manual maintenance. Audit revealed that 2,059 kms (92%) were actually undertaken at a cost of UGX.2.3bn (88%)  A total of 741 kms at an estimated cost of UGX.4.1bn was planned to be undertaken under routine mechanised maintenance. Audit revealed that 877 kms (118%) were actually undertaken at a cost of UGX.4.2bn (103%)  A total of 171 kms at an estimated cost of UGX. 11.6bn was planned to be undertaken under periodic maintenance. Audit revealed that 162 kms (97%) were actually undertaken at a cost of UGX.10.9bn (95%)

c) Field Inspections

Inspections carried out in 35 Municipalities revealed unsatisfactory and incomplete work in 8 Municipalities (23%) as shown in the individual entity reports. The Accounting Officers attributed this to heavy rains, delayed access to read equipment from districts, failure to attract road gangs and high unit costs per Kilometerage in some areas.

I advised the Accounting Officers to engage relevant authorities to revise the funding model to suite the different terrains and situations.

Emphasis of Matter Without qualifying my opinion, I draw attention to the following matter presented in the financial statements –statement of financial performance

 Unpaid Pension and Gratuity Arrears Municipal Councils had not paid pension and gratuity arrears amounting to UGX.2.3bn by the end of the financial year as disclosed in note 24 of the consolidated financial statement of Municipal councils for the year ended 30th June 2018, in their respective Financial Statements. The unpaid pension and gratuity negatively impacts on the well-being of the retired civil servants. The Accounting Officers attributed this to delayed access to the pension payroll arising from delays in verifying pension and gratuity files by the Ministry of Public Service.

I advised the Accounting Officers to follow-up the matter with the MoFPED and Ministry of Public Service to have the pension and gratuity areas payments effected in a timely manner.

 Funds not accounted for An amount of UGX. 263,269,202 included in the expenditure figures of the consolidated financial statement lacked supporting documents at the time of Audit. Consequently, I was unable to confirm that the funds were utilised for the intended purposes. I advised the Accounting Officers to ensure that the funds are properly accounted for or else effect recovery from the responsible officers.

 Inadequate Controls Surrounding Management of Payables It was observed that payables increased from UGX.19.9bn, to UGx.28.5bn as disclosed in the consolidated statement of financial positions for District Local Government. The accumulation of payables can lead to litigation, and payment of fines and penalties.

I advised the Accounting Officers to observe the comment control system and to settle outstanding commitments promptly.

 Outstanding Arrears of Revenue Disclosed in the statement of consolidated Arrears of Revenue is UGX.8.3bn accumulated revenue arrears which have increased by 16% up from UGX.7.2bn reported in the previous year. Money owed to councils represents and asset that is idle as it denies them the opportunity of using the money to provide services promptly.

I advised the Accounting Officers to initiate measures to recover the outstanding amounts.

 Contingent Liabilities Disclosed in the Consolidated Statement of Contingent Liabilities on page 61 of the Consolidated Financial Statements of the Local Governments is a contingent liability of UGX.1bn. These are as a result of legal proceedings lodged against the Municipal Councils. This appears unsustainable in the event that a significant percentage crystallizes into liabilities.

I advised the Accounting Officers to explore the causes of the accumulation of contingent liabilities with a view of curtailing further increment.

Other Matter In addition to the matters raised above, I consider it necessary to communicate the following matter other than those presented or disclosed in the financial statements:

 Local Revenue Performance Regulation 32 of the Local Governments Financial and Accounting Regulations, 2007 requires Councils to ensure collection of all budgeted revenue in an approved manner and the revenue banked intact in Council accounts. A review of revenue performance revealed municipal councils budgeted to collect UGX.20.1bn. However, only UGX.13.3bn (66%) was collected leading to a shortfall of UGX.6.8bn (34%). The Accounting Officers attributed this to challenges in revenue collections from tax parks, creation of new entities, draught and natural calamities.

I advised the Accounting Officers to sensitize of tax payers on tax compliance and to develop other strategies to enhance revenue collections.

Details of other information, Accounting officer and my responsibilities are included in Annexure 1.

John F.S. Muwanga AUDITOR GENERAL KAMPALA

22nd December, 2018.

PART 3: GOVERNMENT MINISTRIES, DEPARTMENTS AND AGENCIES (MDAS)

3.0 GOVERNMENT MINISTRIES, DEPARTMENTS AND AGENCIES (MDAS)

3.1 SUMMARY OF AUDIT RESULTS I carried out 166 Financial Audits and 5 Engineering Audits, 2 under USMID (18 municipalities for two financial Years), 2 in Mulago and Butabika Hospitals, and 1 in Entebbe Senior Secondary School. Accordingly, the detailed reports have been issued to the individual entities. Regarding the financial audits, 154 entities had unqualified opinions up from 149 entities last year. The qualified opinions on the other hand decreased by 3 to 13 and one adverse opinion. S/N FY Type of Opinion Total Unqualified Qualified Adverse Disclaimer 2016/17 149 16 0 0 165 MDAs 2017/18 154 13 1 0 168

3.2 CROSS – CUTTING ISSUES FOR CONSIDERATION BY THE OVERSIGHT COMMITTEES 3.1.1 Budgeting and Budget Implementation Over the years, planned and budgeted for activities are not adequately implemented thereby impacting on the achievement of the national objectives. I assessed the budgeting and implementation of key Ministries, Departments and Agencies to establish adequacy planning, budgeting, financial and annual physical performance by analysing government revenue and expenditure planning procedures, release of funds, testing consistency of planned outputs with the approved budget and verifying the accuracy and completeness of the reported actual outputs. Below are the key highlights of the findings, details are provided in my separate budget performance report and individual reports which have been issued separately.

 National planning and assessment of Government performance I observed some gaps in Government planning and budgeting which affect the timeliness and accuracy of plans by Government. The shortcomings include;  1 out of 16 sectors delayed to submit sector plans.  Lack of service delivery standards in all MDAs and LGs.  Delay in issuing of circular for NDP III by NPA.  Failure by NPA to undertake mid-term review assessment of the NPD II.  Failure by 40 entities to submit strategic plans.  Failure by some MDAs in attaining satisfactory score on Certificate of Compliance (CoC) 88 entities (66%) scored less than 60%

These gaps imply that the sector development plans may not be aligned with the NDP. Further, lack of service delivery standards implies that there is no bench mark for assessing service delivery and implementation of the NDP. In addition, the failure to undertake a mid-term review affects the planning of NDP III as the results of the midterm review are used to provide guidance to stakeholders in the development and timely implementation of NDP III.

There is need for NPA to follow up with the MDAs and LGs to ensure that the above challenges are addressed.  Implementation of planned /budgeted activities

Unimplemented activities in MDAs Section 45 of the Public Finance and Management Act, 2015, requires the Accounting Officer to control the regularity and proper use of the money appropriated to the vote. According to Section 45 (3) of the same Act, the Accounting Officer shall enter into an annual performance contract with the Secretary to Treasury which shall bind the Accounting Officer to deliver on the activities in the work plan for the vote for the financial year. Work plans are based on outputs to be achieved for the financial year and during implementation effort are required to be made to achieve the agreed objectives/targets for the entity within the available resources.

A review of the Ministerial policy statements, expenditures and performance reports revealed a number of entities implemented their activities in accordance to their plans. However, I noted that some entities did not implement activities as planned citing non- release of funds, late release of funds, delayed procurement processes. I also noted that there were diversions in a number of instances.

The most affected entities were Ministry of Works and Transport, Ministry of Health and Ministry of Education and Sports.

Details of implementation of planned activities are in my budget performance report issued separately. I advised Accounting Officers to follow approved plans and appropriations in implementation of activities and follow up with MoFPED for full funding of activities.

 Non Payment of Pension Arrears I noted that many votes were not paying pension and gratuity to beneficiaries. For MDAs, by the close of the f/y an amount of UGX35bn, up from UGX 17.34bn last financial year, which had been released for payment of pension was not paid out. The biggest amount, of UGX11.6bn is by Ministry of East African Affairs. For Local Governments, an amount of UGX30.6bn down from UGX100.7bn had not been spent by close of the year.

The Accounting Officers attributed this to non-existent pensioners, delayed verifications and late releases of funds. This negatively affects the delicate lives of senior citizens and has a direct impact on their human rights and needs to urgently be addressed.

 Under absorption It was observed that there has been an improvement in the disbursement and absorption of loans; by the close of 2017/2018 only 10 loans were performing below expectation with absorption levels below 10%.

Several projects had not utilised significant amounts of funds released to them. For example USMID project which had disbursed an amount of UGX100.6bn to the Municipal Councils. I noted that an amount of UGX95bn was still on the accounts of 14 Municipal

Councils (UGX95bn) unutilised despite various incomplete/abandoned civil works due to non-payment to Contractors. A significant number of projects had delays in implementation with the Energy and Education sectors being the most affected. Unspent funds imply delayed or non-implementation of planned activities for service delivery. The occurrence of these unspent balances was attributed by Accounting Officers to late release of funds from Ministry of Finance, Planning and Economic Development, inefficiencies in procurement units and incompetent contractors among others.

I advised the Accounting Officers to liaise with MoFPED for timely release of funds and streamline procurement and contract management processes.

3.1.2 Decentralization of Pension and Payroll Management In financial year 2014/15, Government partially decentralized Pension management with the Planning (budgeting) and ensuring that processing of files is undertaken by MDAs and LGs. MOPS pledged to eventually have the decentralization of pension to be fully undertaken by all MDAs and LGs. Whereas the Government has made substantial progress in reducing the ghost pensioners, I noted that there were still gaps in the processing of Government employee emoluments as indicated below.

 I noted that 1674 staff from the June 2018 payroll deemed to have reached the mandatory retirement age were still on the active payroll and were paid a total of UGX.1.4bn during the month of June alone in form of salaries and allowances contrary to Public Standing Orders.  Payroll of June 2018 revealed that pensioners in various Votes were employed on contract terms but there was no evidence indicating that their job positions required special skills. Some of the positions in question include; drivers, plant operators, accountants, administrative assistants, askaris and special constables which positions can easily be filled from the existing job market. Irregular employment of pensioners results into excess expenditure by Government and denies the unemployed access to government jobs.  The system being used to manage the pension was unable to generate automatic notifications of the retirement due dates.

 There were delays in solving queried files as 931 files were queried and stored at the MOPS awaiting collection by the respective vote human resource officers for further action. I noted that it takes on average between 6 to 12 months for vote Human Resource Officers to pick up the queried files for correction.

 I noted from review of the IPPS electronic files that some pensioners were assigned multiple gratuity payments both on the payrolls and interface files. In the event that Votes do not carry out a review to ascertain the accuracy of the interface files uploaded on the IFMS, the possibility of double payments cannot be ruled out. I note that Government is in the process of procuring a system that will solve these challenges. I await the outcome of this initiative for future pensions and call for immediate addressing of bottlenecks for the 931 pensioners.

3.1.3 Non-Compliance with Tax laws During the year under review, a sample of MDAs did not comply with Tax laws in respect to deductions and remittances to UGX. 27.4 bn. The failure to deduct and remit taxes directly impacts on collections by the Uganda Revenue Authority. I advised Accounting Officers to comply with the tax law.

Table 3: Non-deduction and Non-remittance of taxes

S/N Entity Non deducted Non remitted taxes taxes 1 Community Agricultural Infrastructure - 18,287,066,139 Improvement Programme – Project 3 (CAIIP – III) 2 Urban Markets and Marketing Development of - 6,184,417,820 Agricultural Products Project 3 District Commercial Services Support Project 1,062,000 - (DICOSS) 4 Soroti University - 141,733,220 5 ADB V Support to Higher Education, Science 2,450,004,629 - &Tecchhnology-1273 (USD. 657,578.14) 6 Gulu University 324,624,045 - 7 Gulu Regional Referral Hospital - 111,598,776

Total 2,775,690,674 24,724,815,955

3.1.4 Wasteful/ Nugatory Expenditure Good practice requires Accounting Officers to reduce cases of apparent waste, extravagant administration or failure to achieve value for money due to management’s laxity in the conduct of operations. However, I noted wasteful expenditure to the tune of UGX 1.6 bn. These arose as a result of interest on late payments on VAT and breach of contracts. Table below refers. This affected the implementation of activities in the entities and on the overall service delivery.

I advised Accounting Officers to adhere to the contract arrangements with a view of avoiding such expenses.

Table 4: Wasteful/Nugatory Expenditure S/N Entity Particulars Amount 1 Ministry of Water and Interest charges Environment and Urban 803,111,726 Development 2 Ministry of Education and These include payment of Sports interest on delayed payments, litigation costs for wrongful 798,940,237 termination of contracts and refund of embezzled funds. Total 1,602,051,963

3.1.5 Outstanding Receivables During the review, it was noted that receivables worth UGX. 60.8 bn were not collected by the various Ministries, Departments and Agencies and were therefore still outstanding as at 30th June 2018 as summarized in table below. This was a reduction from the total receivables of UGX. 74.8 bn as at 30th June 2017. There is a risk that the receivables may not be collected. I advised the Accounting Officers to ensure timely collection of receivables and devise measures to enforce recovery.

Table 5: Outstanding Receivables S/N Entity Summary Amount 1 Ministry of Justice & Constitutional Affairs 20,609,131,791 2 State House 590,200,000 3 Petroleum Fund 12,877,415,932 4 Water Supply And Sanitation Programme support 32,064,486 (WSSP) I under JWESSP 5 Kyambogo University 4,684,030,407 6 Busitema University 246,527,500 7 Ministry of Education and Sports 21,609,448,397 8 Uganda Blood Transfusion Services 74,600,000 9 Jinja Regional Referral Hospital 109,663,453

Total 60,833,081,966

3.1.6 Staff Shortages I noted that out of the total Government staff establishment of 469,216 positions, only 311,987 positions had been filled leaving a gap of 157,229 representing 34% of vacant posts across MDAs/LGs. These vacant posts include key staffing posts such as Doctors, Clinical Officers, Professors, Theatre Staff, Human Resource Officers, Legal Officers and Commissioners among others.

The major staffing shortfalls were noted in Local Governments, Public Universities and Directorate of Public Prosecutions with staffing levels of only 30%, 40% and 41% respectively which are far below the recommended minimum staffing level of 65%. Police and Prisons are equally substantially affected. Inadequate staffing affects the timely implementation of entity activities and may adversely impact on the entities in the achievement of its strategic objectives. The matter requires urgent attention. I advised Accounting Officers to make concerted efforts in engaging with all stakeholders to ensure that vacant posts are filled to enable the entities adequately deliver on their mandate.

3.1.7 Untitled Land/ encroached land/ other land matters Land matters have again remained an issue featuring in my current year audit report. A number of instances have been noted where Government entities have continued to lose out on land to encroachers because the land is not fenced, surveyed and titled.

The entities that are greatly affected by this problem are Uganda Police (UPF), Prison Services and public universities. Further, I noted that the Uganda Land Commission which is mandated to hold Government Land in trust does not have an updated register of all the land it holds in trust for Government. There is a need to address land issues in Government Institutions.

Table 6: Untitled/Land/Encroached land/Other Land Matter

S/N Entity Land Matter 1 Directorate of Public The ODPP RSA Residence Kapchorwa building was Prosecutions constructed on land whose ownership was contested. 2 Uganda Police Force Unsurveyed land, Untitled land, Encroachment on Natete land (total land with issues is approximately 570 acres. across the entire country) 3 Uganda Prisons Unaccounted for land at Luzira (106.692 acres), Services Untitled and Unsurveyed land, Land with encroachments, disputes and encumbrances at Arua, Namalu, Amita, Ngenge, Ragem, Kotido, Bukedea and Budaka--un surveyed and un titled land is equivalent to 89 pieces of varying sizes across the country 4 Ministry of Defence Compensation of Land at Usuk, Ngariam Katakwi, JIE Block and Veterans Affairs 4, Plot 21, Nakapirimor, Kotido District, Petero Bashaija (Estate of Maria Kakindu) Kabamba and Plot 20 Lugard Avenue, Entebbe (Total 7.675bn) 5 Ministry of Agriculture Untitled Land(VODP),Missing land title and loss of land to Animal Industry & Government Departments (Bukalasa Agricultural college) Fisheries 6 Ministry of Tourism, 6 pieces of land where museums are located did not have Wildlife and titles Antiquities 7 Ministry of Water and Various water schemes built (construction cost over Environment UGX50bn) across the country have no land titles 8 Public Universities Illegal encroachment, underutilised and untitled land (KYU, Soroti, Busitema, Muni, Gulu) 9 Jinja Referral Lack of Titles

10 Ministry of Science Lack of Land Titles for PIBID Land (land at Sanga and Technology approximately 50 acres and land where the water source is located at Kyamugambira approximately 4 acres).

3.1.8 Court cases won by Government I observed that a sum of UGX. 20.6bn was reported as cumulative arrears of revenue as at 30th June 2018 arising from won cases. There was no evidence to show that Management had collected any of the arrears although the Ministry continues to make payments for cases lost. There is a risk of loss of Government revenue arising from failure to enforce collection of revenue due from cases won.

The Accounting Officer explained that the Ministry has engaged external parties to follow up collection of the outstanding arrears of revenue from cases won. I advised the Accounting Officer to expeditiously follow up the matter and have the outstanding revenue collected.

3.1.9 Pending legal cases I noted that a number of entities had ongoing court cases whose outcomes were still uncertain. Notable among them were Ministry of Energy and Mineral Development and Makerere University as outlined in table below.

Table 7: Pending Legal Cases

S/N Entity Estimated legal cost Remarks 1 Ministry of Energy and 389,800,000,000 several legal cases arising from Mineral Development land compensation claims for the Isimba and Karuma projects 2 Soroti University 1,025,265,000 3 Makerere University 5,634,291,157 4 Makerere University 3,803,637,896 Business School Total 400,263,194,053

Their eventual determination and/or payment could negatively effect on the cash flows and ability of the concerned entities to continue as going concerns.

I advised Management to always ensure due diligence in carrying out their work to safeguard against litigation and consequential unfavourable outcomes.

3.3 Sectoral Key Findings 3.3.1 Accountability a) Funding for Tax Incentives The roles and objectives of the Tax Policy department under Ministry of Finance Planning and Economic Development (MoFPED) among others are to initiate, evolve and formulate policies to achieve economic policy goals and objectives including stimulating investments and also raise domestic revenues to finance the government budget. The department is also mandated to evaluate and advise on the impact of tax policy on taxpayers and the economy.

It was noted that the Ministry introduced a policy of paying taxes to URA on behalf of Companies in specific sectors such as the steel sector. In addition, the ministry also agreed to settle electricity bills for some firms in the textile industry. However, due to lack of a proper policy, it was observed that incentives are given without accompanying budget provisions and as such, this has always led to creation of domestic arrears under the Ministry. As such, by the close of the FY 2017/2018, domestic arrears attributable to these incentives had grown to UGX.153 bn up from UGX.83 bn in the previous year, this represented an 83% increase.

The Accounting Officer explained that the Tax and Energy incentive was not backed by relevant resources, which created domestic arrears. I advised Government to consider establishing a policy framework for not only guiding the funding mechanism for such incentives but to also limit them to available resources.

b) Inadequate Project monitoring by Project Steering Committees Project Steering Committees have a role to provide overall guidance on project activities and this is to be done on a regular basis. However, I noted 8 projects whose value amounted to USD.516,760,000 (UGX.1.912trillion) were experiencing difficulties in having these meetings undertaken. As a consequence, there were delays in approving and implementing work plans and manuals and policies approved. This has adverse effect on the timelines for implementation which could lead to extra costs in case of project extensions.

The Accounting Officers attributed this to difficulties in constituting these meetings as the membership consists of Permanent Secretaries that are usually busy on other assignments.

There is need for Government to review the compositions of these committees with a view to having alternative representatives at these meetings so that regular meetings can be undertaken.

3.3.2 Energy and mineral development sector

 Funds withdrawn from the Petroleum Fund

Section 58 of the Public Finance Management Act (PFMA), 2015, requires withdrawals from the Uganda Petroleum Fund (UPF) to the Uganda Consolidated Fund (UCF) to be made under authority granted by an Appropriation Act. In addition, section 59(3) requires that Petroleum revenues be used for financing infrastructure and development projects.

I noted that management transferred UGX.125.3 billion on 2nd November 2017 from the UPF to the UCF, without explicit mention of the UPF, in the Appropriation Act, as a source of funding. Instead the withdrawal was premised on the MTEF fiscal framework for financial years 2015/16-2021/22 submitted to Parliament which includes the different sources of revenues financing the budget. In the absence of guidance from the Appropriation Act, which would indicate the activities for which the funds have been budgeted, there is no assurance as to whether the funds were used to finance infrastructure and development projects of Government, as provided for under Section 59(3) of the PFMA.

In response, management explained that the Appropriation Act, as defined in article 156 of the Constitution, provides for only expenditures but does not reflect the various sources of funding for the budget, and that discussions are ongoing to review the presentation of the Appropriation Act to incorporate funding sources.

I advised management to liaise with the relevant authorities to align the legal framework to sufficiently provide for a format of the Appropriation Act which shows the purpose, activities and amounts of the Petroleum Funds to be appropriated under the Consolidated

Fund, or to be transferred to the investment reserve account in accordance with the PFMA, 2015.

 Delay to establish the Petroleum Investment Framework

Section 62 and 63 of the PFMA 2015, requires that monies withdrawn from the Petroleum Fund to the Petroleum Revenue Investment Reserve (PRIR) shall be done with the approval of Parliament and warrant of the Auditor General. In addition the money shall be invested in accordance with the Petroleum Revenue Investment Policy issued by the Minister of Finance, Planning an Economic Development, in consultation with Secretary to the Treasury. Section 64 (3) also requires that Bank of Uganda (BoU) manages the PRIR within the framework of a written agreement entered into between the Minister and the Governor of Bank of Uganda. Section 66 further provides for the appointment of a Petroleum Investment Advisory Committee to advise the minister on investments to be undertaken under the Petroleum Revenue Investment Reserve.

However, three years after enactment of the law, the framework (PRIR, Policy, Committee, agreement) were not in place. It is commendable that BoU made call investments using the Petroleum Fund bank balance of USD.108,764,044, during the period under review and earned interest amounting to USD1,007,212.92. In the absence of an investment framework, I could not guarantee whether the investments provided value for money and maximum returns had been obtained without causing undue risks to the Fund. Though management stated that a Draft Investment Framework was in place, it had not been approved.

I advised the Accounting Officer to expedite the approval process of the Petroleum Investment Framework and appointment of an Investment Advisory Committee, in line with the requirements of the PFMA, 2015 to guide the Investment of funds from the Petroleum Fund. In addition, BoU should provide documentation regarding the type of investments, interest rates agreed and duration.

 Court cases relating to compensation of sub-surface rocks

I observed that there are a number of on-going court cases arising from legal suits by Project Affected Persons (PAPs) against the Ministry of Energy and Mineral Development.

The legal suits relate to compensations for sub-surface rocks amounting UGX. 389.8 billion as at 30th June 2018. An amount of UGX379.1 billion relates to compensation claims for land affected by the construction of Isimba HPP while UGX. 10.75 billion relates to the construction of Karuma HPP.

These court cases may result into the delays in the construction of the strategic dams thus resulting into increase of commitment fees and delay in achieving the intended objective of the project.

I advised Government to expedite the settlement of these court cases.

 Delayed Completion of Projects due to Right of Way challenges

I noted that a number of Projects under the Energy sector were not completed within the agreed contract periods. This was attributed to delays in compensation of Project Affected Persons, hence failure to access Right of Way (ROW). Many PAPs also refuse the valuations by Chief Government Valuer. The delay to complete the projects ranged from 4months to 8 years and resulted into contract cost escalations in some projects. For example the case of Mbarara-Nkenda transmission line which delayed for 8 years resulting into standby costs, additional supervising consultant’s costs and interest charges totalling USD 9,936,215.1 and UGX.5.1bn and Hoima-Nkenda transmission line which delayed by two years and has resulted into standby costs of USD982,295.

I advised Government to acquire land before commencement of such major projects.

3.3.3 Education a) Under absorption of Projects funds under MOES Assessment of absorption of Loans and Grants from various development partners indicated low uptake of the funds given the remaining implementation period.

Table 8: Under absorption of project funds Project Loan Amount Current %age Elapsed End Date Absorption duration

(HEST-AfDB) UA 67,000,000 UA35,804,422.4 53% 5 Years 30/06/2019

USDP-PSFU USD.21,800,000 USD.4,090,945 19% 3 years 31/08/2020 (World Bank)

USDP-MOES USD.78,200,000 USD.1, 2% 3 years 31/08/2020 (World Bank) 516,701.86

UTSEP USD.100, USD.54, 469,714 54% 4 years 30/06/2019 (GLOBAL 000,000 PARTNERSHI P FUND)

The Accounting Officer attributed the delays to;  Low disbursement of funds due to delays in constituting the project coordination unit.  Insufficient funds as a result of disbursement conditions by the World Bank such as matching grants under component 4 of Uganda Skills Development project and difficulties in securing internationally recognises Twinning Institutions to Support Local Technical colleges.  Delayed signing of the Financing agreements by the Government of Uganda

I advised projects management to streamline planning and procurement processes so as to reduce the inefficiencies which are affecting the project implementation. I also advised the Implementing Ministries to put in place proper follow up procedures to ensure timely signing of Financing Agreements. b) Review of Operations Of Public Universities I undertook a review of management of operations of the 9 public universities for selected key areas. The audit focused on management of fees collection, management of University land, management of income generating assets, allocations to key budget areas, and staffing. The following were observed;

 Implementation of Fees Collection policies

I noted that nine (9) public universities had not fully implemented the measures put in place to ensure collection of all fees due to the University. This led to accumulation of tuition arrears amounting to UGX 11.841bn as at 30th June 2018. The arrears were majorly identified in Makerere (UGX 3.5bn), Kyambogo (UGX 4.5bn) and Gulu (UGX 1.4bn). Further analysis indicated that tuition arrears in 6 Universities span over a period of one year with UGX 4.058bn outstanding for 2 years and UGX 0.363bn outstanding for 3 years and above. The under collection of tuition fees affects implementation of planned activities and achievement of intended objectives.

I advised the Universities’ management to ensure adequate adherence to guidelines set out in the fees management policies.

 Illegal Occupancy of University facilities

Physical inspections of the University premises revealed that 5 out of the 9 public Universities had over 380 private businesses (mostly small scale) occupying University facilities and space without tenancy agreements or Memorandum of understanding. This implies that the tenants illegally occupied the premises since there were no official tenancy agreements with the businesses. Due to lack of tenancy agreements, the tenants were neither paying the Universities tenancy fees nor utility fees for electricity and water consumed thus occasioning a financial loss to the Universities. I advised management to develop policies on administering business operations at the universities.

 Under collection of Rental fees from Tenants

Review of tenancy agreements and rental collections for 2 Universities revealed that the Universities were supposed to collect UGX 2.179bn from tenants as per their tenancy agreements but only collected UGX 1.162bn resulting into a shortfall of UGX 1.017bn during the financial year. This presented an average increase of 143% in shortfall from UGX 0.460bn experienced the previous financial year. The uncollected rental fees may become irrecoverable from the tenants leading to revenue loss.

I advised management of the universities to put in place measures to ensure that all rental fees due to the universities are fully collected.

 Inadequate budget allocation for Library function

I noted that despite a general increment of provisions for Library resources between FY2016/17 and 2017/18, the allocations to library by all public Universities were at an average of 1.1% of the approved budget estimates below the prescribed allocation of 10% contrary to the University and Other Tertiary Institutional standards regulations, 2005. Insufficient funding to the Library limits the universities ability to facilitate research and growth in the existing and newly developed areas of study.

I advised management of the Universities to ensure that adequate funds are allocated for this function in line with the regulations.

c) Status of stadia in the Country Despite the enormous success that Ugandan teams have shown in the recent past both on the local and international scene, especially in Athletics, Football, Netball, University Sport, Rugby; field inspections and review of the National Council Sports report on the status of stadia in the country revealed lack of; perimeter walls, water facilities, Lighting facilities, acceptable playing grounds, and functioning toilet facilities. Incidences of Land encroachment were also widely prevalent in stadia located in Municipal councils.

This has rendered most of the stadia unfavourable for hosting sporting activities which has limited talent growth in the country. This has also limited the ability of most sports federations and the National Council of Sport from achieving their core mandate of promoting sports development in the country.

Management explained that most of these stadia are owned by government and are managed as private enterprises under the control of Boards while others are managed by District Councils. I also observed that stadia do not receive any government financial support, and therefore cannot sustain their maintenance budgets.

I advised Management to develop a feasible strategy for improvement of sports facilities in the country and ensure that necessary approvals are obtained from line Ministries, Local Authorities and Departments for stadia Infrastructural funding.

3.3.4 Justice Law and Order Sector  Operationalization of regional Government analytical laboratories The Directorate of Government Analytical Laboratories (DGAL) opened regional laboratories in Mbarara, Gulu, Mbale, and Moroto. To date, a total of UGX.2.2bn has been invested in these facilities. The investment was aimed at having exhibits analysed locally and to reduce the referral of exhibits to Kampala for analysis. Although these regional offices were opened, they were non-operational. They lacked adequate staff and necessary equipment and had instead been turned into collection centers for exhibits and samples for onward transmission to Kampala. Failure to optimally utilize such resources not only denies the public the services of the Government chemist but also directly affects the delivery of justice. For example, there has been accumulation of case back logs. During the year, DGAL received a total of 2000 case applications for various types of analyses but only managed to dispose only 726 cases translating into only 36.3% of the total applications received. Overall, DGAL has accumulated significant case backlog over the years with 5559 cases unattended to. According to the Accounting Officer, a budget has been drawn to handle case backlog in FY 2019/20 amounting to UGX12.8bn.

There is need to prioritize the implementation of this case backlog strategy and engage Government to have the budget for this activity funded.

 Failure to produce suspects in court and overstay of prisoners on remand Section 25(1) of Police Act requires that a police officer on arresting a suspect without a warrant shall produce the suspect so arrested before a magistrate’s court within 48 hours unless earlier released on bond. A review of the case register and case files in 5 sampled police stations revealed that a number of suspects spent more than the 48 hours in cells without either being charged or being granted police bond. In some cases suspects spent

up to 200 hours without being charged. Keeping suspects beyond the mandatory 48 hours not only contravenes the provisions of the Act but also results in unnecessary expenditure for the force in terms of costs to maintain these suspects.

Relatedly, an analysis of the population of prisoners currently on remand revealed that the performance of Uganda Prison Services (UPS) in achieving the objective of addressing the problem of long stay on remand, high remand population and the observance of the right to fair and speedy trial was still unsatisfactory. A number of prisoners had stayed for long periods on remand and in some cases without being produced in court. It was noted that 2305 prisoners had stayed on remand for more than 3 years. Overstay on remand affects the delivery of justice to these suspects and is a contravention of the rights to a fair and speedy trial.

Management attributed the delays to inefficiencies in agencies within the sector that investigate, prosecute and try suspects which have a direct effect on the length of stay of these suspects. I advised UPF and UPS to liaise with responsible agencies to ensure that the suspects are arraigned in court within the mandatory period.

 Management Information Systems within the JLOS sector I observed that the JLOS entities procured Management Information Systems at a cost of UGX.14.7bn to enable these entities undertake their mandates as follows.

Table 9: Details of Management Information systems within JLOS sector

Entity System Purpose of the system Cost (bn) Uganda Crime Records Ensure that case investigations are automated 0.5 Police Management and to improve efficiency within the Force Information investigations department of the UPF. System (CRMS) Suspect Profile To provide profiles of suspects through capture System (SPS) and storage of bio data, photographs, and thumbprints among other features, to help in quick identification of suspects. DPP Prosecution Improve case output through the use of 14 Case computer-based systems, record and collect Management information pertaining to cases, rapidly transfer Information case details from law enforcement through the

System use of computer and communications systems (PROCAMIS) and roll over the system in all DPP Offices country wide. MOJCA DCL Information The system among other functions was procured 0.05 Management to; System  Track on going cases giving details like; the lawyer handling the case, documents used in the case, status of the case, file movement, tasks handled during the case, and amounts claimed against Government.  store case information in soft copy  Run reports as requested.  Easily provide amounts claimed against Government as well as cases pending payment with their outstanding amounts. Judiciary Government is yet to procure a System 0 Uganda Prisons staff Government is yet to procure a Human .15 Prison Management Management System to improve on the Service System efficiency in prisons information. Total cost 14.7

However, I noted that the implementation of the MIS has had challenges towards attainment of its objective. For example, the system procured by DPP four (4) years ago has only had 11 (9.2%) out of the planned 119 stations covered and operational. The Accounting Officer attributed this to a number of reasons such as;  Inadequate trained personnel  Insufficient laptops and scanners  Lack of training manuals and software review documents.  Standalone systems which do not interface with other government systems. Failure to operationalise the systems negates the purpose for which they were procured and may result in total waste of resources invested.

There is need for Government to undertake a comprehensive assessment of the level of implementation and ensure that these systems are fully operationalised as envisaged. These systems should be integrated if the information has to be effectively shared.

 Outstanding court awards and compensations MOJCA had outstanding domestic arrears of UGX.664bn during the year ended 30th June, 2018. The bulk of the liabilities comprised of unsettled court awards and compensations amounting to UGX.655bn. A review of a sample of files revealed some cases that had not been paid nor considered for payment for close to 10 years after the award was made had accumulated interest totalling to UGX124bn. Delay to settle the obligations have resulted into Government accumulating interest on the principal amounts.

I advised the Government prioritises settlement of these arrears to minimise the accumulation of avoidable interest payments.

3.3.5 Tourism Sector  Management of Museums and Monuments During the year under review, Government invested UGX 53,889,420 in establishing and managing 4 Museums in across the country. However, an inspection of these museums to establish how they are managed revealed that there was no Policy and Regulatory guidelines put in place to regulate access, management and accountability of old and new assets in the Museums and Monuments. What is guiding management and accountability of the historical monuments is a very old historic monuments Act that appears outdated. As a consequence, there are over 650 sites and monuments that have been documented but many of these are yet to be mapped and gazetted. There were no funds provided in respect of research and promotional activities of the Museums implying that the expected value from undertaking research activities may not have been achieved. Government will not match the global standards as expected. I also noted that 6 pieces of land where museums are located did not have titles. The affected Museums include those located in Kampala, Soroti, Kabale and Moroto.

There is need for Government to fund research activities in line with the provisions of the International Museum Standards a view of benefiting from global dynamic research activities

3.3.6 Works Sector  Expiry of Standard Gauge Railway Board (SGR) It was noted that all the Board members’ terms expired in November 2017 and have not been renewed or replaced contrary to Section 4.4 of the SGR Project Governance Manual which requires members of the Board to hold office for a period of 2 years renewable at the discretion of the Minister of Works and Transport. For instance the Annual Board reports had not yet been prepared and submitted to the Minister. Absence of a Board creates challenges in governance and execution of the Project’s mandate. The Accounting Officer explained that the issue of the expiry of the SGR board was brought to the attention of the Minister for further action.

I advised management to expedite the process of re-appointment or appointment of new Board members as required by the manual.

 Development of New Kampala Port at Bukasa The Ministry of Works and Transport plans to contract a modern port at Bukasa on the shores of Lake Victoria as part of the development of the Central Corridor from Kampala across Lake Victoria to Mwanza, Musoma to Dar es Salaam on the Indian Ocean. The Central Corridor will provide an alternative route to the Northern corridor from Kampala to Mombasa hence promoting regional trade, increasing economic growth and integration, reducing heavy traffic on the Northern Corridor hence reducing road maintenance and cost of doing business. It was noted that the Master plan for the development of the new Kampala port at Bukasa was finalized. In addition the topographic survey was completed though the water lines are not yet complete. The training needs assessment report was prepared but no training was carried out. Procurement of consultancy services for construction of start-up infrastructure (Road and Fence) is in advanced stage.

In spite of the above progress to date with the accompanying benefits for the country, it was noted that a budget provision for the compensation of 1,833 project affected persons (PAPs) estimated at UGX.87.5 billion had not been made in the financial year 2018/19. The implication is that the project may stall thereby impacting implementation of subsequent project phases.

3.3.7 Health Sector  Improvement of Health Services at Mulago Hospital and the City of Kampala Project (MKCCAP) The Government of the Republic of Uganda received a loan from the African Development Fund and the Nigerian Trust Fund towards the cost of the improvement of Health Services at Mulago Hospital and the City of Kampala Project. Specific objectives of the project included improvement of interrelationships of facilities and departments within and between the floors and blocks, improvement of the internal and external works, improve appropriateness of specification of finishes, overhaul and modernise the electro- mechanical works and enhancing the functionality of the hospital. I noted that whereas the civil works executed were generally in accordance with the agreed designs and specifications, there were some issues I noted that should be addressed to ensure delivery of the hospital infrastructure is as per the approved designs.

There was omission of essential components of works during planning and design review as a result of resource constraints. Owing to this, the Consultant was requested to design a reduced scope of rehabilitation works that would fit in the budget. This resulted in some essential components of the works such as organ transplant unit, paediatric ICU, pathology unit, landscaping and incinerator being omitted in the design review on the understanding that funds permitting, to be done in future. During execution of works, it became clear that some of the omitted works needed to be carried out and on this basis, MOH sourced for additional funding which substantially increased the project cost.

The project has experienced significant delays in execution. The original project period of 24 months had been exceeded by 16 months. Delays in execution of works were mainly attributed to delayed handover of sections of the site due to delayed relocation of patients to Kawempe and Kiruddu hospitals. The final section of the site was handed over in October 2016 (22 months after the project commencement) and yet clause 2.1 of the general conditions of contract of the signed contract states that the contractor will be given full access to site before commencement of works. Other reasons for delayed execution of works were; increased scope of works, late instructions and pending information from the consultant, delayed payment of VAT amounts, and delayed payment

of IPC no.13 by 69 days. Delayed execution of works resulted into additional costs of USD 380,000 incurred in extension of the supervising consultant’s contract. Furthermore, Kiruddu hospital septic tank overflows from time to time due to overwhelming number of patients transferred from Mulago hospital posing a health risk to the users and neighbouring areas.

There is Lack of a maintenance plan for implemented Infrastructure. There are a lot of sophisticated installations, being done by international experts, yet the Contract did not allow for maintenance costs in case of any unforeseen future failures. It is evident that in case of future equipment failures, there will be either need for restoration by the same experts, or neglect which will mean non achievement of value for money on the implemented infrastructure. I advised the Accounting Officer to ensure that; a maintenance plan and budget is provided for maintaining the sophisticated installations at the Hospital Complex; and training of local personnel is undertaken since the installations were undertaken by international experts.

3.4 SUMMARY OF AUDIT RESULTS OF ENTITIES This section includes all matters that were classified as matters of high significance during the audit. It summarises the findings in each individual audit report and includes all entities with modified and unmodified opinions. They comprise of findings in the basis for qualified opinion paragraphs, key audit matters, emphasis of matter, other matters and compliance matters raised. The details are in the individual reports issued separately to Parliament and Accounting Officers. Refer to Annexure II

PART 4: COMMISSIONS, STATUTORY AUTHORITIES AND STATE ENTERPRISES

4.0 COMMISSIONS, STATUTORY AUTHORITIES AND STATE ENTERPRISES

4.1 SUMMARY OF AUDIT RESULTS I carried out 134 Financial Audits for Commissions Statutory Authorities and State Enterprises and 13 Engineering Audits under UNRA during the year under review. Accordingly, the detailed reports have been issued to the individual entities. By the time of this report, 6 financial audits were still ongoing while 4 planned financial audits were not undertaken.

125 entities had unqualified opinions representing an increase of 6.8% from 117 unqualified opinions issued last year. The qualified opinions on the other hand decreased by 40% from 15 to 9 in the year under audit and the disclaimer of opinion also decreased by 100% from 2 to None. Chart below refers; Figure 1: Summary of Opinions

Chart showing opinions

140 120 100 80 60 40 20 0 Unqualified Qualified Disclaimer Total

FY2016/17 FY2017/18

4.2 FINANCIAL PERFORMANCE OF PUBLIC CORPORATIONS AND STATE ENTERPRISES FOR THE YEAR ENDED 30TH JUNE 2018

In line with the PFMA 2015, I reviewed the consolidated summary statement of Financial Performance of Public Corporations and State Enterprises for the year ended 30th June 2018 and noted the following:

4.2.1 Completeness of Statement of Performance Section 52 (1c) of the Public Finance Management Act (PFMA), 2015 requires the Accountant General, within three months after the end of each financial year, to prepare and submit to the Minister responsible for finance and the Auditor General the consolidated summary statement of the financial performance of Public Corporations, State Enterprises and Companies where Government has controlling interest.

However, a comparison of the consolidated statement of treasury operations and the consolidated summary of financial performance of the public corporations and state enterprises revealed that entities with shareholders' equity of UGX 15.7 Trillion as at 30th June 2018 where government has controlling interest1 were not consolidated. Below is a summary of financial performance of public corporations and state enterprise that were not consolidated.

Table 10: Un-Consolidated State Enterprises S/N Enterprise Government Shareholders' Shareholding Equity 1 National Social Security Fund 100% 9,936,291,648,000 2 Uganda Railways Corporation 100% 3,426,533,654,000 3 Uganda Electricity Generation 100% 829,652,214,000 Company Limited 4 Uganda Electricity Transmission 100% 379,189,000,000 Company Limited 5 National Housing and Construction 51% 311,942,288,000 Company Limited 6 Uganda Property Holdings Limited 100% 229,950,802,062 7 Uganda Electricity Distribution 100% 205,977,780,000 Company Limited 8 Nile Hotel International Limited 100% 193,584,509,164 9 Uganda Air Cargo Corporation 100% 76,361,088,653

1 Ownership interest with enough voting shares, that is over 50%

10 Post Bank Uganda 100% 64,205,605,803 11 Uganda Wildlife Conservation 100% 13,233,498,966 Education Centre 12 Uganda Printing and Publishing 100% 11,370,013,230 Corporation 13 Uganda Seeds Limited 100% 6,678,058,279 14 NEC Farm Katonga Limited 100% 5,050,688,396 15 NEC Construction Works & 100% 2,047,012,597 Engineering Limited 16 NEC Tractor Project 100% 1,910,356,736 17 NEC Tractor Hire Scheme Limited 100% 1,572,895,139 18 NEC Uzima Limited 100% 1,507,223,000 19 Uganda National Oil Company 100% 0 Limited Shareholders' Total Equity 15,697,058,336,025

This implies that the consolidated summary statement of financial performance of the public corporations and state enterprises is incomplete and thus does not reflect the accurate government ownership.

The Accountant General should maintain a comprehensive and up-to-date record for all the entities where government has controlling interest to reflect the true picture of government ownership, in line with the law.

4.2.2 Alignment of Reporting periods Section 85(3) of the PFMA, 2015 requires State Enterprises or Public Corporations whose financial year end are not aligned with the Government of Uganda (GoU) financial reporting period of 30th June, to comply within three years after the commencement of this Act, which elapsed in the FY 2017/18.

I noted that most enterprises had complied with the directive of aligning their financial year ends with the GoU financial reporting period of 30th June, except Post Bank Uganda Limited and Pride Micro Finance which still have 31st December as their reporting period ends. These however have cited the provisions of the Financial Institutions Act as the impediment to compliance.

I advised the Accounting Officer to harmonise the PFMA 2015, with the Financial Institutions Act.

4.2.3 Financial Performance of Enterprises The Government of Uganda (GoU) owns shares in a number of State Enterprises. These enterprises, which are independently managed, are supposed to operate efficiently, make profits and pay dividends to Government. Their financial performance is therefore of interest to Government. I noted however that Nakivubo Memorial Stadium did not submit financial statements while results for Civil Aviation Authority relate to the year ended 30th June 2016.

A computation and analyses of the profitability, liquidity and gearing parameters of these enterprises revealed the following;

a) Profitability of Enterprises Fourteen (14) out of the 29 State Enterprises analysed made profits in the year under review, with Bank of Uganda (BoU), National Social Security Fund (NSSF) and National Water and Sewerage Corporation (NWSC) posting profits of UGX 424bn, 240bn and 51bn respectively as shown in the table below.

Table 11: Profitability of Enterprises No. Enterprise Profit After Profit After Tax - %age Tax - 2017/18 2016/17 (UGX) Change (UGX) 1 Bank of Uganda 424,113,000,000 (95,982,000,000) (542) 2 National Social 240,444,091,000 11,003,211,000 2,085 Security Fund 3 National Water and 51,188,903,000 26,711,133,000 92 Sewerage Corporation 4 Pride Micro Finance 16,496,928,000 15,046,452,000 10 5 Post Bank Uganda 6,204,064,468 5,061,961,867 23 Limited 6 New Vision Printing 2,318,223,000 14,685,000 15,686 and Publishing Company Limited (Dividend is proposed not declared) 7 Nile Hotel International 1,521,712,661 761,162,918 100 Limited 8 Uganda Air Cargo 1,511,953,445 2,598,256,138 (42) Corporation 9 NEC Construction 795,920,408 781,979,028 2 Works & Engineering Limited

10 NEC Tractor Hire 752,282,106 439,878,942 71 Scheme Limited 11 NEC Luwero Industries 230,073,329 (854,360,481) (127) Limited 12 Uganda Property 125,315,766 553,504,151 (77) Holding 13 Uganda Post Limited 100,495,000 (4,449,441,000) (102) 14 Uganda Wildlife 65,550,177 89,060,223 (26) Conservation education Centre 15 NEC Tractor Project (70,636,203) (31,875,591) 122 16 Uganda Seeds Limited (182,934,495) 48,162,092 (480) 17 Mandela National (238,902,339) (669,415,803) (64) Stadium 18 NEC Farm Katonga (359,026,879) 38,464,862 (1,033) Limited 19 NEC Uzima Limited (385,744,000) 57,668,000 (769) 20 Uganda Printing and (1,403,798,564) (616,572,195) 128 Publishing Corporation 21 Kilembe Mines Limited (1,624,302,143) (440,930,080) 268 22 National Housing and (2,050,991,000) 12,863,781,000 (116) Construction Company Limited 23 Uganda Electricity (6,682,561,000) (6,730,922,000) (1) Distribution Company Limited 24 Uganda National Oil (9,584,449,000) (3,421,297,000) 180 Company Limited 25 Uganda Electricity (10,856,159,000) (13,483,005,000) (19) Generation Company 26 Uganda Development (17,571,299,000) 13,691,981 (128,433) Corporation (Group) 27 Civil Aviation Authority (21,070,422,000) 11,922,770,000 (277) (2016) 28 Uganda Electricity (75,526,000,000) 62,254,000,000 (221) Transmission Company Limited (prior year figure are for 6 months) 29 Uganda Railways (93,036,050,000) (199,481,183,000) (53) Corporation

The worst performing State Enterprises were Uganda Railways Corporation (URC), Uganda Electricity Transmission Company Limited (UETCL) and Civil Aviation Authority with losses of UGX93bn, UGX75.5bn and UGX21bn respectively.

In comparison to the previous year, 12 enterprises posted improved (increased profits or reduced loss) performance, with New Vision Printing and Publishing Company Limited, NSSF, Kilembe mines registering over 200% percentage increase. b) Return on Assets Return on Assets (ROA) is an indicator of how profitable an enterprise is relative to its Total Assets. It measures management’s efficiency in using the enterprise’s assets to generate earnings. NEC Tractor Hire Scheme Limited, NEC Construction Works & Engineering Limited and Pride Micro Finance recorded Return on Assets of 43%, 27% and 7% respectively. Apart from the banking institutions, which may not be asset intensive, the majority of the enterprises are suboptimal and inefficient in utilising their assets. The worst performing Enterprises were Uganda National Oil Company Limited, NEC Uzima Limited and Uganda Development Corporation. Details are shown in the table below.

Table 12: Returns on Assets No. Entity Return on Assets 1 NEC Tractor Hire Scheme Limited 43.3 2 NEC Construction Works & Engineering Limited 26.8 3 Pride Micro Finance 6.7 4 National Water and Sewerage Corporation 3.2 5 National Social Security Fund 2.7 6 New Vision Printing and Publishing Company Limited 2.7 (Dividend is proposed not declared) 7 Bank of Uganda 2.7 8 Post Bank Uganda Limited 1.8 9 Uganda Air Cargo Corporation 1.7 10 NEC Luwero Industries Limited 1.3 11 Nile Hotel International Limited 0.8 12 Uganda Wildlife Conservation education Centre 0.5 13 Uganda Electricity Distribution Company Limited 0.4 14 Uganda Post Limited 0.1 15 Uganda Property Holding 0.1 16 Mandela National Stadium -0.1 17 Uganda Electricity Generation Company -0.2 18 National Housing and Construction Company Limited -0.5 19 Civil Aviation Authority (2016) -2.4 20 Uganda Railways Corporation -2.6 21 Uganda Seeds Limited -2.7

22 Uganda Electricity Transmission Company Limited (prior -2.9 year figure are for 6 months) 23 NEC Tractor Project -3.2 24 Kilembe Mines Limited -4.3 25 NEC Farm Katonga Limited -6.2 26 Uganda Printing and Publishing Corporation -9.8 27 NEC Uzima Limited -20.1 28 Uganda Development Corporation (Group) -24.9 29 Uganda National Oil Company Limited -178.5

c) Proposed Dividends Furthermore, I observed that, out of the 17 profit making enterprises, only New Vision Printing and Publishing Company Limited proposed a dividend pay-out amounting to UGX1,912,500,000. In the year under review, it demonstrated this commitment by paying out dividends totalling UGX.101,037,000. Government should ensure that profit making enterprises provide a return to the investment made by government d) Liquidity Assessment I analysed the ability of state enterprises’ to meet their short-term financial obligations by comparing the current assets and current liabilities. The ratio of Current Assets to Current Liabilities exceeding 2:1 is desirable, although acceptable current ratios vary between industrial sectors. I noted that 17 entities were above the ideal threshold, implying that they are able to meet their liabilities as they fall due. 7 entities were below the threshold and may have a challenge of paying their liabilities.

The liquidity assessment of four state enterprises namely Bank of Uganda, Pride Micro Finance, Post Bank Uganda Limited and NSSF was not made because the financial institutions have mandatory liquidity thresholds.

I further observed that 16 out of 24 entities had improved their liquidity ratios in comparison with the previous year.

Table 13: Liquidity of Enterprises S/N Entity Liquidity Liquidity %age 2017/18 2016/17 Change 1 NEC Farm Katonga Limited 305.9:1 0.7:1 43,809% 2 Uganda Seeds Limited 135:1 114:1 18% 3 Uganda Development 62.1:1 50:1 24% Corporation 4 NEC Tractor Project 8.3:1 7.5:1 11% 5 Nile Hotel International 7.8:1 8.6:1 -9% Limited 6 Uganda Electricity 7.6:1 7.2:1 6% Generation Company Limited 7 Uganda Railways 5.4:1 2.9:1 84% Corporation 8 NEC Luwero Industries 5.1:1 19.8:1 -74% Limited 9 NEC Tractor Hire Scheme 5:1 1.6:1 216% Limited 10 Uganda Electricity 4.5:1 3.7:1 22% Distribution Company Limited 11 NEC Construction Works & 3.9:1 1.6:1 135% Engineering Limited 12 New Vision Printing and 3.6:1 3.1:1 14% Publishing Company Limited 13 Uganda Property Holdings 3.5:1 1.8:1 97% Limited 14 National Housing and 2.5:1 2.8:1 -11% Construction Company Limited 15 NEC Uzima Limited 2:1 2.4:1 -16% 16 Kilembe Mines Limited 2:1 3.1:1 -36% 17 Uganda National Oil 2:1 1.6:1 28% Company Limited 18 Uganda Air Cargo 1.8:1 0.1:1 1,643% Corporation 19 Uganda Electricity 1.5:1 1.4:1 7% Transmission Company Limited 20 National Water and 1.3:1 1.4:1 -8% Sewerage Corporation 21 Uganda Post Limited 1.1:1 1:1 6% 22 Uganda Printing and 0.6:1 0.9:1 -29% Publishing Corporation 23 Uganda Wildlife 0.5:1 0.7:1 -27% Conservation education Centre 24 Mandela National Stadium 0.4:1 0.3:1 58%

I advised the Accounting Officers to ensure Treasury/working capital management is strengthened by ensuring speedy collection of debts and reduction of liabilities not guaranteed by enough assets. e) Long-term Debt Entities should be able to meet their long-term debt obligations. Gearing (debt) ratios measure the proportion of the enterprises’ assets that are financed by debt. Although the risk levels vary from industry to industry, a debt ratio of more than 50% is considered undesirable. I noted that 4 State enterprises had debt ratios of more than 50% implying that their total assets were insufficient to cover their total debt. These were UEDCL, UEGCL, UETCL and NWSC.

Another 8 enterprises, namely Uganda Development Corporation, National Housing and Construction Company Limited, Kilembe Mines Limited, New Vision Printing and Publishing Company Limited, NEC Luwero Industries Limited, Uganda Post Limited, Uganda Air Cargo Corporation and Uganda Railways Corporation had debt ratios of less than 50% implying that owners’ equity was sufficient to cover total debt.

I noted that 14 Statutory Enterprises were not highly geared, probably because being Government entities, they depended solely on Government funding (owners’ equity) and internally generated revenue as shown in the table below.

Table 14: Enterprise Gearing No. Entity Debt Ratio

2017/18 2016/17 1 Uganda Electricity Distribution Company 87 86 Limited 2 Uganda Electricity Generation Company 85 86 Limited 3 Uganda Electricity Transmission 84 74 Company 4 National Water and Sewerage 63 59 Corporation 5 Uganda Development Corporation 28 27 6 National Housing and Construction 19 19 Company Limited 7 Kilembe Mines Limited 14 13

8 New Vision Printing and Publishing 9 10 Company Limited 9 NEC Luwero Industries Limited 5 6 10 Uganda Post Limited 5 5 11 Uganda Air Cargo Corporation 3 3 12 Uganda Railways Corporation 1 2 13 NEC Construction Works & Engineering 0 0 Limited 18 Uganda Printing and Publishing 0 0 Corporation 19 Nile Hotel International Limited 0 0 20 NEC Uzima Limited 0 0 21 Pride Micro Finance 0 0 22 Post Bank Uganda Limited 0 0 23 Uganda Wildlife Conservation education 0 0 Centre 24 Uganda Seeds Limited 0 0 25 NSSF 0 0 26 Uganda Property Holdings Limited 0 0

On a positive note though, some entities have reduced their debt-to-asset ratio in the year under review compared to 2016/17. f) Interest cover For some Companies that had taken on loans, I analysed their ability to service the loans through payment of interest, by using the interest cover. Interest cover looks at how many times a Company’s operating profits exceed its interest payable. A cover of four (4) times and above is usually considered to be safe, depending on the nature of industry. The implication is that a company is most likely to meet its interest payments.

Going by the above, I noted that 6 State enterprises were better placed to meet their interest obligations, while 4 were not. The three worst performing State enterprises in this aspect were, Uganda Electricity Transmission Company Limited, National Housing and Construction Company Limited, and Uganda Post Limited which may have challenges meeting their interest obligations. Details are shown in the table below

Table 15: Enterprises' ability to service loan obligations No. Entity Profit before Interest Number of Interest (Financing Times (Operating cost) (UGX) Profit) (UGX) 1 NEC Luwero Industries Limited 231,972,069 1,898,740 122.2 2 National Water and Sewerage 58,889,248,000 891,744,000 66.0 Corporation 3 NEC Tractor Hire Scheme 765,650,619 13,368,513 57.3 Limited 4 NEC Construction Works & 810,468,628 14,548,220 55.7 Engineering Limited 5 NEC Tractor Project 69,353,628 1,282,575 54.1 6 Bank of Uganda 442,262,000,000 18,149,000,000 24.4 7 Uganda Property Holdings 672,423,379 229,649,582 2.9 Limited 8 Uganda Post Limited 600,331,000 626,531,000 1.0 9 National Housing and (101,502,000) 1,949,498,000 -0.1 Construction Company Limited 10 Uganda Electricity (106,636,000,00 588,000,000 -181.4 Transmission Company 0) Limited

Through its oversight role, government should caution the management of these enterprises to limit the amounts of debt to manageable levels guaranteed by improved profitability.

Overall Conclusion/Recommendation

Whereas government policy to invest in critical sectors of the economy is commendable, it is important to ensure that enterprises are operating efficiently and profitable and able to service both short and long-term obligations to meet sector objectives. There is need for government to improve on supervision and monitoring of these entities. Introduction of performance based contracts with clear performance targets for management of these Entities will also enhance performance. In addition government could also explore avenues of procuring effective Public Private Partnerships to revamp the operations of some of these enterprises.

4.3 CROSS-CUTTING ISSUES FOR CONSIDERATION BY THE OVERSIGHT COMMITTEES I noted cross-cutting issues affecting performance of Commissions, State Enterprises and Authorities which I bring to the attention for consideration by the Oversight Committees. These include:

4.3.1 Garnishee of Government Funds I observed that a sum of UGX.16.85bn was garnisheed from 3 Government agency accounts resulting from court judgments to Creditors during the year under review. These include KCCA, URSB and Administrator General. (KCCA project KIIDP II, USD3.942m & URSB UGX 1.539bn) The Garnishee order has often led to the suspension of the rights to withdraw funds from the entity accounts thus delaying or affecting implementation of planned activities. Furthermore if funds are not safeguarded from Garnishee orders, there is a likelihood that the Government activities will stall or project activities will be suspended. Government in consultation with cabinet should develop strategies to safeguard funds from Garnishee orders. 4.3.2 Corporate Governance Organizations established by Acts of Parliament, the Public Enterprises Reform and Divestiture Act (Cap 98) and The Companies Act, Cap 110 are required to have governing bodies and structures. A review of governance practices in a number of organizations revealed weaknesses in a number of Boards including expired boards, misunderstandings with management, lack of internal audit functions. Details as shown in the table below. I also noted that Uganda National Meteorological Authority and Uganda Seeds Company Limited had the same issues for over 2 years.

Table 16: Corporate governance weaknesses

S/N ENTITY GOVERNANCE ISSUE

1 Uganda Revenue Authority - Absence of a Board Charter Corporate Services 2 Uganda Seeds Co Ltd. Absence of a Board of Directors since January, 2008

3 Uganda Free Zones Authority Lack of an Internal Audit function 4 National Agricultural Advisory legal mandate of NAADS (Irregular restructuring) Services-NAADS 5 Management Training and Lack of a governing council Advisory Centre (MTAC) 6 National Drug Authority Board not fully constituted 7 National Medical Stores Failure to provide for position of Deputy General Manager 8 National Information Board not fully constituted Technology Authority -Uganda 9 Uganda Communication Conflicting sections of the Law in Regard to the Commission Position of the Executive Director also being a Board Member 10 Uganda Institute of Unclear governance structure and legal status of Communication and the Institute Information Technology 11 Uganda Posts Limited Expired Contracts for Members of the UPL Board

12 Uganda Human Rights Only 3 of the 7 members were appointed Commission 13 National Identification and Lack of a fully constituted Board Registration Authority (NIRA) 14 National Planning Authority Board not fully constituted

15 National Council for Disability Failure to Hold Annual General Meeting 16 Uganda National Cultural Expiry of Board Tenure Centre 17 Uganda National Children’s' Lack of a governing board Authority 18 Uganda Industrial Research Absence of a Board of Directors Institute 19 Uganda National Council for Absence of a fully constituted Governing Council, Science and Technology only 9 out of the 36 members are appointed

20 National Enterprise Corporation Absence of an Audit Committee 21 Uganda Veterans Assistance Failure to implement the mandate of Uganda Board Veterans Assistance Board 22 Uganda Wildlife Research and Inappropriate composition of the Governing Training Institute Council and absence of academic Board

23 Nile Hotel International Limited Continuous stay of the Board after the expiry of the two terms and override of managements responsibility by the board 24 Uganda National Lack of a Board of Directors Meteorological Authority 25 Uganda Road Fund Board misunderstandings. In spite of several meetings, chairperson has not signed any minutes 25 Civil Aviation Authority Failure to assess likelihood of fraud and absence of related policies 26 Uganda Railways Corporation - The terms of all Board members for the Standard SGR Gauge Railway Board had expired in November 2017

Noncompliance with corporate governance principles hinders oversight and may affect the implementation of the organisation policies and procedures. Key decisions like approval of procedures, manuals and budgets, staff recruitments and strategic plans are not made

I advised Management to comply with corporate governance principles as this will enhance efficiency and effectiveness of the institutions in attaining their prescribed mandate.

4.3.3 Pending Legal Cases I noted that a number of entities had ongoing court cases with estimated legal costs amounting to UGX.531.4bn whose outcomes were still uncertain. Notable among them were, Uganda National Roads Authority (UNRA) Kampala Capital City Authority and NSSF whose contingent liability has been outstanding for over 2 years.

Table 17: Pending Legal Cases S/n Entity No. of cases Estimated legal Remark outstanding cost-UGX 1 National 15 18,000,000,000 Estimated costs for Agricultural outstanding court cases Advisory Services- NAADS 2 Kampala Sanitation 1 1,395,856,789 Impending Legal Suits Program (KSP) - on Disputed National Water Compensation Offers/claims 3 Kampala Capital N/A 39,818,479,736 For existing and potential City Authority legal claims 4 National Social 1 42,200,000,000 Tax dispute with URA Security Fund (NSSF) 5 Uganda National N/a 430,013,722,276 Contingent Liabilities Roads Authority Total 531,428,058,801

Their eventual determination and/or payment could negatively affect the cash flows and ability of the concerned entities to continue as going concerns. I advised Management to always ensure due diligence in carrying out their work to safeguard against litigation and consequential unfavourable outcomes.

4.3.4 Wasteful/ Nugatory Expenditure I noted cases of nugatory expenditure totalling to UGX.65.3bn in a number of entities. These mainly arose as a result of failure to meet contractual and payment obligations among others. This affected the implementation of activities in the entities and on the overall service delivery.

Table 18: Wasteful/ Nugatory Expenditure SN Entity Particulars Amount (UGX) 1 National Agricultural Delayed delivery and installation of milk 93,159,046 Advisory Services- coolers and pineapple juice processing NAADS equipment to the intended beneficiaries, Extension of LCs as a result of non-performance 2 Electricity Regulatory URA Penalty on under declared PAYE 108,389,948 Authority (ERA) 3 Mbarara Nkenda- Delayed acquisition of right of way 43,668,960,236 Tororo-Lira (ROW) resulting into Standby costs, transmission line Interest charges and additional (UETCL) supervision costs to the contractor (UGX.5,076,700,788 + USD 9,936,215.1) 4 Uganda Electricity Surcharges for delayed payments to 391,752,610 Transmission Company Bujagali Energy Limited (BEL) Limited 5 Hoima-Nkenda Costs resulting from delay to handover 3,815,237,625 Transmission Line site to KEC due to right of way Project (UETCL) challenges (USD 982,295.99) 6 Uganda Posts Limited Penalties and fines resulted from 330,537,700 interest on late payments, breach of contracts and litigation costs 7 Kampala Capital City Interest charged for delayed payment 714,318,282 Authority of civil works 8 National Enterprise Nugatory interest paid to NSSF 21,761,163 Corporation – Tractor Project 9 National Information Unused bandwidth 663,398,278 Technology Authority Uganda 10 Uganda National Roads Interest on delayed payments 15,509,054,863 Authority Total 65,316,569,751 Exchange rate used (1USD = UGX.3,884)

The wasteful expenditures could have been avoided if management of the respective entities had acted prudently. I advised management of the affected entities to ensure adequate financial planning and to adhere to regulatory and contractual requirements in order to avoid wasteful expenditure.

4.3.5 Staff Shortages A review of the approved staffing structures of various entities revealed a total of 2,380 vacancies in 24 entities. Some of the key vacant positions include; Commissioners, Directors and Managers. This could have been caused by inadequate funds and budget ceiling. The most affected entities include; National Identification and Registration Authority (NIRA), National Drug Authority and Uganda Institute of Communications Technology among others.

Table 19: Staff Shortages Entity Established Filled Vacant %age S/n posts posts posts of Gap 1 Financial Intelligence Authority 64 39 25 39% 2 National Population Council 84 49 35 42% 3 Public Procurement and Disposal of 132 101 31 23% Public Assets Authority 4 Uganda Retirement Benefits 58 30 28 48% Regulatory Authority (URBRA) 5 Dairy Development Authority 140 65 75 54% 6 National Agricultural Research 994 881 113 11% Organization -NARO 7 National Animal Genetics and Data 313 142 171 55% Bank (NAGRIC) 8 Higher Education Students Financing 36 21 15 42% Board 9 National Drug Authority 109 32 77 71% 10 Allied Health Professionals Council 69 45 24 35% 11 Uganda Cancer Institute 294 209 85 29% 12 Uganda Medical and Dental 26 19 7 27% Practitioners Council 13 National Information Technology 157 66 91 58% Authority-Uganda 14 Uganda Institute of Communications 107 44 63 59% Technology (UICT) 15 Uganda Registration Services Bureau 332 149 183 55% - Operations 16 Amnesty Commission 75 38 37 49% 17 National Identification and 864 206 658 76% Registration Authority (NIRA) 18 National Council for Disability 12 8 4 33% 19 National Women’s Council 8 6 2 25% 20 National Youth Council 14 9 5 36% 21 Uganda National Cultural Centre 57 38 19 33% 22 Uganda Industrial Research Institute 560 282 278 50%

23 Uganda National Bureau Of 640 306 334 52% Standards 24 Uganda Wildlife Conservation & 59 39 20 34% Education Centre (UWEC) Total 5204 2824 2380

Inadequate staffing affects the timely implementation of entity activities and may adversely impact on attainment of their strategic objectives. The respective Accounting Officers were advised to liaise with all stakeholders and have the vacancies filled to enable the entities to adequately deliver on their mandate

4.3.6 Outstanding Receivables I noted that receivables of UGX. 2.92trillion remained uncollected by various Commissions and Statutory Authorities by 30th June 2018. The receivables increased by 26.63% from UGX 2.31trillion in FY2016/17 as shown in the table below. This could have been caused by inadequate collection efforts or non-compliance with credit Management policies.

Table 20: Outstanding Receivables S/N Entity Bal 2016/17 - UGX Bal 2017/18 - UGX %age change 1 Privatisation & Utility Sector 172,696,000,000 80,888,000,000 (53.16) Reform Project (Divestiture & Redundancy Accounts) 2 Uganda Revenue Authority - 1,932,040,000,000 2,589,531,840,858 34 Revenue Collection Account 3 Custodian Board - 3,126,497,383 100.00 4 Capital Markets Authority 239,714,000 194,784,000 (18.74) 5 Financial Intelligence Authority 113,996,000 127,106,000 11.50 6 Insurance Regulatory Authority 49,355,357 64,957,554 31.61 7 Public Procurement and 12,314,825 - (100.00) Disposal of Public Assets Authority 8 Management Training and 677,343,281 723,055,573 6.75 Advisory Centre (MTAC) 9 Hoima Nkenda transmission - 140,272,966 100.00 line 10 Rural Electrification Agency 64,854,115,321 87,202,173,016 34.46 11 Uganda Energy Credit 570,132,000 825,705,000 44.83 Capitalisation Company Limited 12 The Interconnection of - 981,333 100.00 Electrical Grids Of Nile

Equatorial Lakes Countries (NELSAP) Uganda Part 13 Equal Opportunities 239,749,390 211,105,359 (11.95) Commission 14 Uganda National Cultural 334,530,298 2,071,691,350 519.28 Centre 15 Joint Clinical Research Centre - 4,689,310,000 100.00 16 National Drug Authority 17,927,749,070 22,338,224,283 24.60 17 National Medical Stores 11,825,660,000 8,091,650,000 (31.58) 18 Uganda Aids Commission - 74,600,000 100.00 19 Rural Communications 826,301,466 1,695,783,743 105.23 Development Fund 20 Uganda Broadcasting 13,011,508,074 25,038,763,268 92.44 Corporation 21 Uganda Communications 21,300,000,000 26,170,253,357 22.87 Commission (UCC) 22 Uganda Registration Services - 6,252,764,629 100.00 Bureau - Liquidation 23 Kampala Capital City Authority 47,156,334,104 44,095,770,425 (6.49) 24 Uganda Industrial Research - 78,138,376 100.00 Institute 25 Uganda National Council for 113,996,000 127,106,000 11.50 Science and Technology 26 National Enterprise Corporation 519,194,053 505,324,165 (2.67) Construction Work and Engineering Ltd 27 National Enterprise Corporation 239,274,060 260,379,800 8.82 28 Uganda Hotel and Tourism 207,034,396 124,268,897 (39.98) Training Institute 39 National Environment 20,863,895,193 15,307,218,000 (26.63) Management Authority TOTAL 2,305,818,196,888 2,919,957,725,335 26.63

The outstanding receivables represent idle assets which constrain availability of cash for the entities’ operations. There is a risk that the activities for which these receivables were appropriated were not carried out which could have affected the implementation of planned activities. I advised Management of the affected entities to institute necessary measures to recover the funds.

4.3.7 Non-Compliance with statutory deductions I noted that various entities contravened tax and NSSF laws; by failure to deduct withholding Tax of UGX 22.48m and PAYE of UGX 526m, non remittance of PAYE of UGX.23.75bn, VAT of UGX.3.96bn and NSSF of UGX.3.71bn during the year. Uganda Posts Limited, Kampala Capital City Authority, Uganda Revenue Authority - Corporate Services and Joint Clinical Research Centre were the most non-compliant entities. Table 21: Noncompliance with statutory deductions

S/ Entity Non Deduction of Taxes Non Remittance of Statutory Deductions N PAYE WHT VAT PAYE NSSF

1 Uganda 3,675,217,390 Revenue Authority - Corporate Services 2 Uganda 3,281,864,010 1,035,638,150 Posts Limited 3 National 442,536,000 Agricultural Advisory Services- NAADS 4 Electoral 20,052,000 Commission 5 National 373, 510,209 Library of Uganda 6 National 31,140,617 34,660,000 Youth Council 7 Uganda 28,515,000 Export Promotion Board 8 Kampala 676,696,602 20,745,588,266 Capital City Authority 9 Joint 1,933,190,000 Clinical Research Centre 10 Uganda 2,430,540 Medical and Dental

Practitioner s Council 11 Uganda 55,602,000 Road Fund Total 526,653,000 22,482,540 3,958,560,612 23,745,557,033 3,709,877,390

This could have been caused by inadequate funds to meet statutory obligations. I explained to Management that failure to withhold tax attracts fines and penalties from the tax body.

I advised Management of the affected entities to ensure that statutory deductions are made and remitted timely in accordance with the provisions of the law in order to avoid penalties and interests.

4.3.8 Land Matters A number of instances were noted where Government entities have continued to lose their land to encroachers because the land is not fenced, utilised, surveyed and titled. Table 22: Land Matters S/N Entity Issues 1 Uganda Bureau of Statistics Lack of Certificate of Land Title for the Statistics House Plot 9 - Statistics Hous 2 Uganda Free Zones Authority Lack of land title for land acquired at UGX.7.4 billion 3 Uganda Investment Authority Failure to Revise the Service Charge from 0.5% and Ground Rent for Leased Land 4 Uganda Seeds Company Limited Underutilization of land and other assets 5 Uganda Property Holdings Lack of Certificate of Title for Masese Land (the Company land located on JJA 191 Folio 8 Plot 3 Industrial Estate Link in Masese Jinja)

6 National Agricultural Research Lack of certificates of land titles for most of the land at Organization -NARO Research Institutions leading to encroachment 7 National Animal Genetics and 8 out of the 12 ranches had land encroachment issues Data Bank (NAGRIC) 8 Dairy Development Authority Absence of land title, encroachment of school land, Dilapidated structure, no valid agreements with tenants 9 Mandela National Stadium - Increased Encroachment on Stadium Land. Namboole 10 Hoima Nkenda transmission line Delays in land titling 11 Mbarara Nkenda transmission Delays in land transfer and titling line

12 Uganda National Oil Company Lack of Title for assets transferred to the Company 13 Uganda Posts Limited Lack of Land Titles for UPL Land - Plot 40 Margarita Road, Kasese; Plot 18-20 Gogonyo Road, Pallisa; Plot 76 Mawokota Block 92, Mpigi; Plot 6-10 Birch Avenue, Masaka; Plot 2-6 Mutekanga Road, Kamuli; Plot 1-11 Nsambya Road, Kampala 14 Law Development Centre • Untitled Land on plots 34, 89, 155, 159, 166, 170, 221, 222, 245, 450, 451, 464, 465, 466, 482, 481, 508-510, 613-615 • Untitled Land in Kyadodndo and Bukoto 15 Uganda Human Rights Inadequate management of land assets Commission 16 Parliamentary Commission Absence of land titles for 3 plots; 16-18 on Parliament Avenue 17 National Library of Uganda Forfeiture of land/Loss of land 18 NEC Head Quarter Undeveloped Plot in Namanve Industrial Park 19 NEC Farm Katonga Un-surveyed Land/untitled land blocks 274,378 and 386 20 National Water & Sewerage Absence of land titles for assets taken over Corporation 21 National Forestry Authority • Over 2m Hectares of Forest cover lost in last 10yrs  Loss of land in Buhungiro Central Forest Reserve in Kyegegwa District • Encroachment on Namanve Central Forest Reserve 22 Uganda National Road Authority  Delayed return of residual Titles to Project Affected Persons (PAPs) 23 Uganda Railway Corporation  Un-titled land of over 362 sq meters at Nalukolongo leading to encroachment of some plots

I advised Management of the affected entities to process land titles and institute measures to recover land from the encroachers.

4.3.9 Procurement Anomalies I noted in several instances that a number of commissions, statutory authorities and state enterprises did not comply with procurement guidelines during procurement and contract management. The anomalies included un-planned procurements, unjustified use of direct procurement, awards above market prices and un-documented procurements among others.

Table 23: Procurement Anomalies S/n Entity Issues Amount - UGX 1 Financial Investment Uncompetitive procurement of air 162,261,990 Authority tickets worth 2 Insurance Regulatory Incomplete Procurements 210,684,500 Authority 3 National Drug Authority Non-delivery of items paid for during 165,811,844 installation of Microbiology Laboratory Contracts awarded above budgeted 82,222,500 provision Delay in execution of signed contracts 185,670,619 4 Uganda Aids Commission Direct Procurements 36,978,521 5 Uganda Blood Transfusion Un documented procurements under 2,031,530,472 Services the regional blood banks Un-justified use of direct procurement 36,279,935 method Failure to enter into framework contracts 6 Uganda Communications Weaknesses in Contract Management Commission 7 Uganda Free Zones Procurement of air tickets by HR Authority Department instead of PDU 8 Uganda Institute of Direct Procurement 29,406,600 Communication and Information Technology

9 Uganda Heart Institute Contracts above estimated prices 694,476,276 10 Uganda Investment Cancelled Procurements 2,417,186,147 Authority Unplanned Procurements 412,125,972 Ineligible Revision of Contract Price by 82,826,140 more than 15% Irregular Contract Amendment for Additional Quantities 11 URA - Corporate Services Failure to advertise a call for bids to 618,866,009 provide support and maintenance of Disaster recovery site firewall 12 Uganda Virus Research Non-submission of final completion 137,155,200 Institute certificate for the contract for replacement of asbestos sheets Total 7,303,482,725

The Procurements in a number of cases were not competitive and the entities may not have achieved value for money.

I advised management to strengthen controls under procurement and always ensure compliance with the procurement laws.

4.4 SECTORAL KEY FINDINGS 4.4.1 ICT Sector Redundant Resources NITA-U signed a contract for the supply of bulk internet bandwidth of 10Gbps at a total of USD.4,745,000 for 15 years. However, it was observed that the current national bandwidth consumption stands at approximately 3 Gigabits per second (Gbps). I observed that the contract locks NITA-U into paying for the entire internet bandwidth even when not consumed. This implies that at the moment, 7Gbps is being paid for by NITA-U without corresponding commercial utilisation. Under the circumstances, this translates to wastage of the funds paid for the unutilized bandwidth. I advised the Accounting Officer to expedite connection of other commercial users to ensure 100% uptake.

I also observed, that 16 sites out of the 74 MDA sites visited did not utilize the NITA-U network, despite an investment of USD.172,400.8 (approx. UGX. 663,398,278.40). A total of 5.1808 Km, 50 manholes, 14 switches and 2 Optical Network Units (ONUs) were implemented towards these unutilized sites resulting in wasteful expenditure of the same magnitude. Management explained that in September 2017, government issued a directive to all MDAs to procure Internet Bandwidth from UTL, the Government entities that the NBI had been extended required clear guidance before service could be activated, and this hindered the provision of services. I advise the government to streamline the utilisation of IT resources.

4.4.2 Science, Technology and Innovation Sector Inadequacies in the Implementation of the Innovation Fund The government created an innovation fund to support innovation, product development, and commercialization effective FY 2017/2018. The fund aims at enhancing the capacity of local scientists and breaking the bottlenecks along the research and innovation value chain leading towards a knowledge society. The Ministry of Science Technology and

Innovation is currently implementing the Fund through its three core agencies/subventions of; Uganda Industrial Research Institute (UIRI), the Uganda National Council of Science and Technology (UNCST), and Presidential Initiative on Banana Industrial Development (PBID).

During the financial year under review, a total of UGX.35bn was budgeted and released to the Ministry of Science, Technology, and Innovation for the innovation fund. I observed that there was no clear formula applied for the distribution of the funds across the implementing agencies. There were also no operational guidelines or policy on the management of the innovation funds.

As a result, of the total amount released to the ministry, UGX.28,340,742,072 was released to subventions and UGX.6,800,000,000 was retained by the Ministry for monitoring. The Ministry did not release a total of UGX.654,217,928 meant for subventions. I observed that there was scanty information relating to how the projects facilitated under the fund by the subventions (UNCST, UIRI and PBID) were identified. Under the circumstances, there is a risk that researchers with brilliant innovations may not be accorded the chance to benefit from the innovation fund. Besides, the lack of fund management guidelines exposes the fund to a risk of abuse.

The Accounting officer explained that the guidelines on Innovation fund are still in draft form and before cabinet for approval.

I advised Government to expeditiously develop elaborate Policy Guidelines for the smooth operationalization of the innovation fund to enable the creation of maximum impact.

4.4.3 Accountability Sector Departed Asians Properties for which compensations were made I noted that the Custodian board is in the process of winding up as evidenced by minute 34/DAPCB/2018 of the 16th meeting of the Board of Directors in which the Chairman emphasized the issue of winding up Custodian Board activities within one year. I noted that management is still in the process of claiming some assets which were not rightfully repossessed.

Management explained that 115 properties whose former owners had been earlier compensated through the British High Commission and 87 properties for which UNHCR made compensations to former owners way back in 1999, were not under the control of the Custodian Board by the time of the audit. The Board maintains that the seating tenants did not legally repossess the properties and are not paying rent. I noted that some of the properties are in prime locations of Kampala City, for example; Kampala road, Hannington road, Kololo hill drive, Clement Hill drive, Dewinton road, etc. Given the impending winding up activities of the Board, there is a likelihood of closure without proper accountability of the said properties which places them at risk of being lost and occasioning a loss to Government.

I advised government to establish a proper mechanism of following up such assets even when the Board has wound up its activities to ensure proper accountability for the assets in question.

4.4.4 Works and Transport Sector  Delayed return of Residual Titles to Project Affected Persons (PAPs) It is a requirement under the Land Act 1998 subsection (3) for an authorized undertaker executing public works on land to promptly pay compensation to any person having an interest in the land for any damage caused to crops or buildings and for the land and materials taken or used for the works. In the process of compensation, UNRA should obtain titles for the land acquired and return them to the land owners after mutation. Despite having raised this issue in the previous audits, the audit team noted that since 2014, approximately only 222 titles (5%) had been returned to PAPs out of over 4,319 titles collected. This implies that over 4,097 residual titles have not been returned to the affected persons. Of this number, about 169 titles were indicated ready though not yet returned to PAPs yet some of the roads were completed years back and are being used. There are potential risks that some of the land titles initially surrendered to UNRA may be untraceable.

I advised UNRA to liaise with Ministry of Lands to have this process fast-tracked.

 Entebbe International Airport -Expansion Project Management On 8 October 2014, Civil Aviation Authority (CAA) and China Communications Construction Company (CCCC) entered into a contract for the upgrading and expansion of Entebbe International Airport (Phase 1). To access funding for the project, Government of Uganda (GoU), represented by the Ministry of Finance, Planning & Economic Development (MoFPED), signed a concessional agreement with EXIM Bank of China dated 31 March 2015 for a principal amount not exceeding Renminbi 1.26 Billion (USD 200 million) and interest to be charged at a rate of at 2% per annum. Management fees and commitment fees payable are 0.25%. Subsequently, an on-lending agreement was signed between GoU and CAA in November 2015 in which GoU agreed to lend to CAA as borrower the amount borrowed (USD 200 million). The on-lending agreement also transferred all the obligations of GoU as principal borrower from EXIM Bank to CAA. However, I noted that there are inconsistencies in the operationalisation of the requirements of the agreements.. The deemed actions of the different parties are contradictory to the requirements of the agreements. Some of the inconsistencies noted are highlighted below:

 CAA has not fulfilled the terms to fund the repayment reserve account, rather this has been done by GoU; Under the original Government Concessional loan agreement, although the GoU was to pay a management fee of Renminbi 1.315 million, this fee was paid by CAA;  Under the refinancing agreement and funding of the escrow account, it is clearly stated that repayment of the loan is the responsibility of the end user (CAA) and the accounts should be funded using the revenues and collections from the operation of the airport. However, so far it is the Ministry of Finance that has made the interest payments and no revenue collections are being deposited on the escrow accounts as expected.

The inconsistencies in the operationalisation of the agreements and the involved parties' deemed actions represent noncompliance/ breach of contract that could result in penalties and even cancellation of the facility. The initial contract signed between the contractor and CAA requires an independent consultant's verification report before the contract can be deemed to come into effect.

However, it was noted that the 2 subsequent addenda to this contract exclude this clause. Given the complexity and the nature of the agreement, involving an independent consultant’s verification prior to and during construction would represent best practice and contribute to ensuring that the objective of value-for-money is achieved. I advised management to take the necessary steps to ensure that the operationalisation of the contracts and the actions of the different parties are in agreement with the original contracts signed and being adhered to by the different parties.

4.4.5 Trade and Industry Sector  Non-operational projects invested in through Uganda Development Corporation Since 2012, government has made investments in various projects, through Uganda Development Corporation (UDC), amounting to UGX70.1bn. I however noted that projects with investments of UGX53.2bn are not operational. Refer to table below for details. Table 24: Non-operational projects No Investment Amount spent in the FY Accumulated Amount 2017/2018 (UGX) 1 Soroti fruit Factory 2,563,768,000 13,353,129,943 2 Luwero fruit factory 0 367,142,000 4 Tea project 2,697,556,773 10,704,080,460 5 Kira Motor Corporation 3,509,089,000 7,156,734,353 6 Kira ashok 0 1,146,879,627 7 Sheet Glass 133,032,000 215,219,000 8 Uganda National 200,000,000 400,000,000 Commodity Exchange 9 Zombo tea Factory 63,526,000 63,826,000 10 Atiak sugar factory 19,811,808,120 19,811,808,120 Sub-TOTAL 28,978,779,893 53,218,819,503 11 Kalangala Infrastructure 0 16,867,500,000 Services (KIS) Total 70,085,319,505

The only operational project of KIS with an investment of UGX 16.9bn and 45.7% shareholding by UDC has not declared any profits to UDC since 2012. Government should ensure adequate follow up on the progress in order to achieve the intended objectives of eradicating poverty among communities.

I also noted that contrary to Section 4(e) of UDC Act which requires UDC to take over the interest of Government assets in order to manage, promote and facilitate the interest of Government in those entities this has not been achieved as envisaged in some of the assets that included Amber House, Embassy House, Development House, Munyonyo Commonwealth Resort, Nile Hotel, Phoenix Logistics and Tristar apparels. The continued exclusion of these assets from the envisaged management by UDC could lead to loss of revenue to Government. UDC indicated that the process of taking over these assets is on-going and some of which are in the final stages. Government should ensure the assets are placed under the control of UDC for better management.

4.4.6 Agriculture Sector Implementation of Coffee Development Strategy Government desires to accelerate coffee exports from 3.5 million 60-kg bags per year to 20 million 60-kg bags by 2020. To achieve this goal, HE the President directed that 300 million seedlings should be planted every year from FY2014/15 to FY 2017/18 financial years. I noted that the UCDA had inspected and certified for export 4.4 million bags in the year which is a 0.9 million increase from 3.5 million bags in 2014 when the goal was set however, this goal may not be achieved in the set timelines due to the various challenges encountered during its implementation some of which include; • Low survival rates of the seedlings planted at only 42%. • Inadequate coffee extension workers as there are only 44 extension officers who provide extension services to over 1,000 sub-counties in the 104 coffee planting districts. • Distribution of seedlings was not based on demand as the targeted farmers are not listed for purposes of distribution. Therefore there is minimal verification made as to whether the distributed seedlings are planted by farmers which is mainly attributed to the few extension workers; • There is also lack of a farmers’ register as UCDA did not maintain a farmers’ register.

My inspection of coffee seedlings planted in Mukono, Pader, Gulu and Amuru Districts revealed confirmed the challenges indicated above. Management explained that that they had signed MoUs with private organizations that have extension staff and this is anticipated to provide additional support to farmers. In addition, management is building capacity of District and Sub County Extension staff within the Single-Spine Extension system to offer coffee specific knowledge and information to farmers. Government should expedite the current recruitment drive under the single spine extension system to address the challenges in the Agriculture sector.

4.5 SUMMARY OF AUDIT RESULTS OF ENTITIES This section summarises the findings in each individual audit report. It includes all entities with modified and unmodified opinions. These were classified as matters of high significance during audit and comprise of findings in the basis for qualified opinion paragraphs, key audit matters, emphasis of matter and other matters raised. The details are in the individual reports issued separately to Parliament and Accounting Officers. Refer to Annexure III

PART 5: LOCAL AUTHORITIES/ GOVERNMENTS

5.0 LOCAL AUTHORITIES/ GOVERNMENTS

5.1 SUMMARY OF AUDIT RESULTS During the year ending December 2018, the directorate of Local Government planned to undertake 2,434 financial audits including; 121 Districts 41 Municipal Councils, 124 Divisions, 330 Town Councils, 355 Secondary Schools and Tertiary Institutions (Financial year 2017) and 1,463 sub counties .

However, by the end of the Audit year 2018, the Directorate had completed 121 Districts, 41 Municipal Councils, 355 secondary schools and Tertiary, while 440 sub counties were still work in progress and as detailed below;

Table 25: Summary of Audit Results Entity category Planned Completed Percentage Audits in Audits audits (%) progress Districts 122 122 100.0% Municipal Councils 42 42 100.0% Divisions 124 0* 0.0% Town Councils 330 0* 0.0% Secondary Schools and 355 355** 100.0% Tertiary Institutions Sub counties 1463 1042*** 440 Total 2436 1561 *incomplete due to budget cuts; **reports were issued during the year. ***Lower local government for the FY 2014/2015 issued

I have also included the cross cutting issues in Secondary Schools and Tertiary Institutions for the audit of financial year 2017. In addition I have included the cross cutting issues arising from the audit of 1,042 Sub counties during the year 2014/15. Finally my report gives a summary of Opinions on financial statements audited, the modified opinions issued including reasons for modification for consideration by the oversight committee of Parliament.

5.2 CROSS-CUTTING ISSUES FOR CONSIDERATION BY THE OVERSIGHT COMMITTEES 5.2.1 Performance of Youth Livelihood Program (YLP) The Youth Livelihood Programme (YLP) is a Government Programme being implemented under the Ministry of Gender, Labour and Social Development (MoGLSD). The programme, which started in the financial year 2013-2014, was to respond to the existing challenge of unemployment among the Youths and is being implemented in all the 112 districts of Uganda (including Kampala), with a projected total budget of UGX.265 billion. It is also worth noting that the program is run on a revolving mechanism.

The results from my review of this program for the period 2013/2014 and 2014/15 have been reported on in section 2 of this report. This section relates to results from my review of the period 2015/16 to 2017/2018.

 Delays in fund access by the Youth groups I noted that although all funds disbursed from the ministry were duly received by the districts; many districts had delayed to remit funds to the YIGs for more than three months. Out of the UGX124,818,278,518 disbursed to the district for the period 2013/2014 to 2017/2018, a total amount of UGX.122, 232,424,586 was approved and disbursed to 15,949 Youth Groups leaving 2,585,853,932 withheld at the districts. Failure to timely disburse the funds affects implementation of projects and ultimately the rate of recovery. There is also the risk of misuse and diversion at the districts. The was attributed to challenges of YIGs in obtaining TIN and supplier Numbers from URA and MOFPED, delays by YIGs opening bank accounts and failure by LGs to timely train the successful YIGs due to either lack of commitment or delayed release of operational funds.

 Status of fund recovery Section 4.0(xvii) of the YLP program document, 2013 provides that the Youth Grants shall be administered in an interest-free Revolving Fund arrangement. It further provides that that the overall period of repayment should not exceed 3 years. I noted the following:

a) Recoveries From Ongoing Projects (2015/16 – 2017/18) Projects which received funding during the period 2015/2016 - 2017/2018 were considered to be ongoing and therefore presented partial recoveries. During this period, an amount of UGX.83.3bn was disbursed to Youth Groups. An analysis of performance over the period revealed that the rate improved over the period increasing from 24% in 2015/16 to 60% in 2017/18 as shown in below:

Table 26: Recoveries for on-going projects for 2015/16-2017/18 Financial Due for recovery Recovered Rate Year 2015/16 11,290,540,819 2,673,218,476 24% 2016/17 12,121,547,096 6,309,586,720 52% 2017/18 18,905,742,549 11,421,195,874 60%

The positive trend was attributed to; Development and inclusion of performance indicators on YLP in the Annual Local Government Performance Assessment Tool; Invoking of sanctions against poor performing districts by suspending disbursement to the non- compliant DLGs; Undertaking of joint inspection activities at Local Government level to enhance accountability, reporting and responsiveness of DLGs in the implementation of the Programme; Regular joint monitoring and supervision of Local Governments and Youth Groups by the MoGLSD and MoLG; Increased sensitization on radio-talk shows, TVs and Community meetings by MoGLSD, RDCs, IGG and Youth Leaders to strengthen social accountability; Deployment of Programme Officers at the Regional level for close supervision and backstopping of the Local Governments; Collaboration with Police, IGG, and Judiciary to handle reported cases and routine monitoring and implementation support among others.

It should however be noted that while there has been a positive trend in fund recovery, the rate was still unsatisfactory an indication of continued program implementation challenges.

I advised management to address the causes of non-recovery identified above in order to minimise future losses and to be able to achieve the ultimate objective of reducing Youth unemployment.

 Delays in revolving of recovered funds

Out of the total amount of UGX.16.1bn received on the revolving fund account in BoU, UGX.8.1bn had been revolved to other Youth Groups. The balance of UGX.8.0bn (50%) was yet to be disbursed by 30th June 2018. This was attributed to delays by districts to submit the applications to the ministry. Delay in revolving funds to other eligible groups undermines the ultimate goal of the program.

I advised the Accounting Officer to adhere to the programme guidelines so that the funding in the revolving account is rolled out to other beneficiaries.

5.2.2 Accounting and Controls  Unverified Pension and Gratuity Although the Consolidated Financial Statements disclose an amount of UGX. 32.8bn as Gratuity and pension liabilities as at 30th June 2018, I observed that a total of UGX. 14.5bn was not properly supported with documentation. Under the circumstances, I was not able to provide assurance that the amounts in question are genuine liabilities to government. I advised the Accounting Officers to ensure that these pension arrears are paid after a comprehensive verification of the supporting documentation.  Mischarge of Expenditures I noted that during the year under review, a total of UGX 1.5bn was charged on items which do not reflect the nature of the expenditure.

This was majorly attributed to the accounting framework which has limited expenditure codes. Mischarge of expenditure undermines the purpose of budgeting as a control tool and impacts on the credibility of the financial statements.

I have advised the Accounting Officers to engage the Accountant General to address the matter.

 Low absorption/Unspent Balances Section 45 (3) Public Finance Management Act (PFMA) 2015 provides that an Accounting Officer shall enter into an annual budget performance contract with the Secretary to the Treasury which shall bind the Accounting Officer to deliver on the activities in the work plan of the vote for a financial year submitted under section 13 (15). It was observed that in 10 Districts and in 1 Municipal Council an amount of UGX. 11,770,488,982 had not been utilised by the end of the financial year. Failure to implement all the planned activities is an indication of capacity gaps and delays in release of Funds.

I advised the Accounting Officers to engage Ministry of Local Government and Ministry of Finance Planning and Economic Development to address the challenges.

5.2.3 Assets Management  Management of Medical Equipment Inspection of 26 District hospitals and 90 Health Centre IV revealed that 9 (8%) Health Facilities did not have an inventory of all their medical equipment exposing the medical equipment to mismanagement and loss without trace. I further observed that a number of key medical equipment was either missing, non-functional or not in fair condition as summarised in the table below.

Table 27: Status of Medical Equipment No Basic Medical Availability Functiona Non % of Non- Equipment l Functional Functional

1 Vacuum Extractor 25 13 12 48% 2 Resuscitation manual 34 28 6 18% adult 3 Ultra sound scanner 25 17 8 32% 4 Centrifuge 8 piece 30 21 9 30% electric1 5 Blood pressure 212 157 55 26% machines[bp] 6 Oxygen cylinders 106 66 40 38% (large size) 7 Ophthalmoscope 39 20 19 49% 8 Blood bank 54 31 23 43% refrigerator Total 525 353 172

The above critical equipment was non-functional due to absence of technical staff required to maintain and operate them and lack of adequate maintenance budget. During inspection I noted that there was no skilled personnel to handle the Ophthalmoscopes equipment used for eye examination in 30 (27%) out of the 110 Health Facilities visited.

Consequently, patients are referred to distant facilities to receive the same services putting their lives at risk. In addition lack of skilled staff required to handle and operate the specialist medical equipment leads to poor diagnosis and increased costs due to poor handling of equipment.

I advised the Accounting Officers to engage the relevant Authorities for funding the maintenance budget and recruitment of the required technical staff.

5.2.4 Management of Natural Environment  Lack of Environmental Committees Section 14 and 16 of the National Environment Act, 1995 requires the Authority shall, in consultation with the Local Councils to provide guidelines for the establishment of the Environment committee for each Local Council, in this Act referred to as a District or Municipal Environment Committee. The function of the committee among others is to coordinate the activities of the council relating to the management of the environment, ensure that there are appropriate mechanisms in place to address the poor practices on the natural resources and prepare a state of the environment report every year.

Contrary to the requirement under the Act, it was observed that out of 117 District, 38 (32%) did not have Environmental Committees. I further observed that out of the 44 Municipal Councils 7 (16%) did not have an Environment Committee in place.

Lack of the committee negatively impacts on the management of environment and natural resources in the Local Governments as there is no adequate monitoring and supervision of the usage of Natural Resources. This was mainly attributed to inadequate funding to facilitate the work of the Committee.

I advised the Accounting Officer to engage the relevant Authorities to ensure that funds are secured and the Environmental Committees are established in accordance with the Law.  Unlicensed Activities on Natural Resources Section 37(3) of the National Environment Management Act, 1995 requires that the authority may, in consultation with the lead agency and the District Environment Committee, declare any wetland to be a protected wetland, thereby excluding or limiting human activities in that wetland while Section.36 provides for restrictions on the use of wetlands and requires a person to obtain written approval from the authority given in consultation with the lead agency.

Audit inspection revealed that there were a number of unlicensed activities carried out on various wetlands and forests in form of cultivations, settlement and waste dumping. I observed that out of the 117 districts, 88 (75%) were affected by unlicensed activities in

the wetlands while 48 (41%) lacked a register of licensed activities on the gazetted wetlands.

The continued undertaking of these practices on the natural resources continues to have adverse effects on the environment like climate change and unbalanced eco system. This was majorly attributed to inadequate staffing coupled with limited funding to carry out the necessary monitoring activities, and lack of legal ownership of the natural resources.

I advised the Accounting Officers to address the issue of legal ownership, lack of registers and institute measures to ensure that utilisation of natural resources is in accordance with the law.

 Existence and Functioning of the Physical Planning Committees I observed that 34 Districts and 13 Municipal Councils out of a total population of 117 and 44 respectively lacked Physical Planning Committees contrary to the Physical Planning Act, 2010. I further noted that, all the Local Governments with the committees in place, lacked representation of a Physical Planner/Architect from private practice as required by law. In addition I observed that in all Councils there was neither a budget nor expenditure on activities of the committee implying non-prioritization of their functioning.

Absence of planning committees affects physical planning as there is no oversight body to enforce existing plans which results in unplanned developments, increased land conflicts, encroachment, pollution, and flooding.

I advised the Accounting officers to ensure that the Physical Planning Committees are established, have detailed plans in place and budgeted for.

 Garbage Management in Municipal Councils Section 39(1) of Local Government Act 1997 (as amended) empowers urban councils to make bye-laws in relation to their powers and functions. Part three of the Second Schedule of Local Government Act, 1997 Cap 243 (as amended) requires urban councils to offer sanitary services for the removal and disposal of garbage. Inspection revealed that 13

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(33%) out of 39 Municipal councils (MCs) lacked bye laws in relation to management of garbage. I further noted that out of the 39 Municipal Councils 21 (54%) lacked transport equipment, composite sites and treatment facilities. Consequently, large quantities of garbage remained uncollected and inappropriately disposed which is hazardous to human beings and the environment.

I advised the Accounting Officer to liaise the relevant authorities to ensure that by-laws are approved and enforceable and source funding for waste management.

 Financial Statements for Lower Local Governments Financial Year 2014/2015 In my audit reports for the two previous years, I noted that there was still a problem with presentation of financial statements in the Lower Local Governments. In the financial year under review, I finalised 1042 audits of lower local governments earlier noted. The earlier noted shortcomings were persistent. The anomalies include;  Non-adherence to presentation and disclosure requirements as per Local Government Financial and Accounting Manual 2007, for example, lack of cash flow statements, memorandum Statements and schedule.  Lack of Board of survey reports  Lack of other statements, schedules and Notes to the accounts.  Incomplete Financial Statements  Lack of accountability documents  Un authorized excess expenditure  Non-disclosure of Comparative figures in the Financial statements  Misstatement of account balances.  Non- preparation of primary books of accounts such as Ledgers, cash books, and vote books.  Lack of Revenue Registers  Failure to prepare Financial Statements Preparation of Financial statements is a stewardship role in which accountability for application of resources entrusted to Accounting Officers is reported to the stakeholders.

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Failure to present financial statements properly impairs interpretation and analysis of entity performances. This was attributed to understaffing, lack of training, Low levels of practical experience by clerks and non-adherence to the guidance provided in the Local Governments’ Financial and Accounting Manual 2007 and other accounting standards.

I advised the Accounting Officers to liaise with responsible authorities to address the staffing and capacity gaps in the Lower Local Governments.

5.3 SUMMARY OF AUDIT RESULTS OF SPECIFIC ENTITIES The summary of audit results includes all matters that were classified as matters of high significance during audit. These comprise of matters in the basis for qualified opinion paragraphs, key audit matters, emphasis of matter and other matters raised. The details are in the individual reports issued to Parliament and Accounting Officers. Refer to Annexure IV

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PART 6: VALUE FOR MONEY

6.0 VALUE FOR MONEY

6.1 OVERVIEW

This part contains summary reports of 10 Value for Money (VFM) audits undertaken during the audit year ended 31st December 2018. The summary reports contain the scope, key findings, conclusions and recommendations made for each of the VFM audits undertaken. The detailed reports have been separately issued and copies are available on the OAG website. 6.2 DEFINITION AND FOCUS OF VFM AUDITS

A VFM audit is an independent and objective examination of whether government undertakings, systems, operations, programmes, activities or operations are operating in accordance with the principles of economy, efficiency and effectiveness and whether there is room for improvement. Economy, efficiency and effectiveness (3Es) can be defined as follows:-

 Economy – Minimizing the cost of resources. The resources used should be available in due time, in an appropriate quantity and quality and at the best price.

 Efficiency – Getting the most from available resources. It is concerned with the relationship between resources employed and outputs delivered in terms of quantity, quality and timing.

 Effectiveness – concerns meeting the objectives set and achieving the intended results.

These principles (3Es) also encompass audits addressing environmental management and equity.

Value for Money audits are conducted in accordance with International Organization of Supreme Audit Institutions (INTOSAI) standards. Those standards require that a performance audit should be planned, conducted and reported on in a manner, which ensures that an audit of high quality is carried out in an economic, efficient and effective way and in a timely manner.

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In carrying out such an audit, the auditor takes an analysis of the conditions that are necessary to ensure that the principles of economy, efficiency and effectiveness can be upheld. These conditions may include good management practices and procedures to ensure the correct and timely delivery of services. Where appropriate, the impact of the regulatory or institutional framework on the performance of the audited entity is also taken into account.

Value for Money Audits Undertaken 1. Performance audit of government of Uganda’s preparedness for implementation of sustainable development goals (2030 agenda) 2. Management of wetlands in Uganda by the wetlands management department (WMD) under the ministry of water and environment (MWE) 3. The regulation of universities by the National Council of Higher Education 4. The identification and registration of persons by the National Identification and Registration Authority 5. Report on the facilitation and promotion of export trade by Uganda Export Promotions Board 6. An evaluation of the output based aid project implemented by Rural Electrification Agency 7. The reliability of meteorological information produced by Uganda National Meteorological Authority (UNMA) 8. Follow up report on the value for money audit on regulation and monitoring of drilling waste in the Albertine graben by the National Environment Management Authority (NEMA) 9. Budget performance by the health sector 10. Budget performance by the works sector

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6.3 KEY FINDINGS, CONCLUSIONS AND RECOMMENDATIONS 6.3.1 PERFORMANCE AUDIT OF GOVERNMENT OF UGANDA’S PREPAREDNESS FOR IMPLEMENTATION OF SUSTAINABLE DEVELOPMENT GOALS (2030 AGENDA) The Sustainable Development Goals (SDGs) also referred to as the 2030 Agenda are a set of 17 aspirational goals elaborated through 169 targets and 232 indicators. The UN member states are expected to use SDGs to frame their agenda and political policies over the 15 years from January, 2016 to December, 2030. The SDGs form a cohesive and integrated package of global aspirations the world committed to achieve building on the accomplishments of their predecessors the Millennium Development Goals (MDGs). The 2030 Agenda seeks to drive the economic, environmental and social dimensions of sustainable development through five pillars namely; people, planet, prosperity, peace and partnerships.

During the United Nations General Assembly in New York, September 2015 the Government of Uganda was among the UN Member States that adopted the comprehensive, far reaching and people centred set of universal and transformative goals and targets. The declaration gave states the primary responsibility to follow-up and review, at the national, regional and global levels, the progress made in implementing the goals and targets over the fifteen years of the Agenda.

The preparation of Uganda’s NDPII (2015/16-2019/20) coincided with the inter- governmental negotiations on the SDGs in 2015. This gave the Government of Uganda an opportunity to try and integrate the SDGs framework into its national plan, accelerate national efforts towards achieving a middle income status, while pursuing sustainable and inclusive development within the framework of the Uganda Vision 2040 and the second National Development (NDP II). Accordingly, Uganda was among the 22 countries that volunteered to conduct a National status review under the auspices of the first High Level Political Forum (HLPF) in July 2016 to establish the country’s readiness. The Office of the Prime Minister is charged with the responsibility of creating an enabling environment conducive to the implementation of SDGs. SDGs activities are guided by the established SDGs Coordination Framework, 2017 and SDGs roadmap, 2018.

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The objective of this audit was to assess the Government of Uganda’s preparedness to implement the 2030 Agenda.

KEY FINDINGS The Government of Uganda (GoU) through the OPM has made strides in preparing the country for the implementation of SDGs. The government formulated the SDGs Coordination Framework in 2017 and launched the SDGs roadmap in 2018. As required by the SDGs Coordination Framework, the key institutional Technical Working Groups namely: the Planning; Data; Finance; Communication and advocacy; Coordination, Monitoring and Evaluation and reporting that should steer the SDGs function have been established and operationalised. However, this audit has identified key bottlenecks that still impede the full operationalisation of the SDGs activities as envisaged under the SDGs Coordination Framework as outlined below;

i. Integration of SDGs into National Context Uganda committed to take ownership and establish national frameworks for the implementation and achievement of the 17 SDGs. NPA was expected to guide the review process for identification of applicable goals and targets, and how they were to be reflected in Uganda’s development policies, strategies, and planning processes to identify areas for improvement. By the time of audit, June 2018, the NPA had not undertaken a review of the national policies and frameworks with respect to SDGs to identify gaps and develop an action plan to address them. There were no targeted reviews done to assess how the existing Comprehensive National Development Planning Framework (CNDPF), National Policy for Public Sector Monitoring and Evaluation (NPPSME), GAPR, and the Results Reporting Framework (RRF) accommodated the elements of SDGs.

ii. Alignment of Policies, Budgets and Programmes to SDGs NPA undertook a preliminary assessment that put the level of NDPII alignment to the global targets of the SDGs at 69% (strategic level).However the road map developed was not clear on when and how the remaining 31% will be incorporated into the National development framework. It was also observed that NPA had not mapped and communicated the applicable targets and indicators for each sector, MDA, LGs, private partners and CSOs. In addition, guidelines for mainstreaming SDGs into sectors, MDAs

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and Local government plans had not been developed. Without a framework for mainstreaming SDGs, assessment of alignment of sectors, MDAs and LGs to SDGs will present challenges. iii. Policy integration and coordination TWGs are not functioning as envisaged in the SDG coordination framework. The committees and TWGs were not fully constituted; there was no record of quarterly meetings and progress reports. None of the TWG had appointed its full membership, and assigned responsibilities to the various parties in the TWG. iv. Creating ownership and engaging stakeholders in integrating the SDGs into the national context Overall, the level of public awareness on SDGs in the country remained low as reflected in responses obtained through interviews conducted by the audit team in selected MDAs and LGs. There were no specific SDG outreaches organised to engage and get views of various stakeholders at regional and local government levels for consideration in the preparation process. Whereas the TWG on communication and advocacy had developed a communication framework for SDGs, it was yet to develop the communication and advocacy strategy. The MoICT&NG with support from UNDP had translated SDGs awareness messages into 10 local languages in form of brochures. However, the communication and advocacy TWG did not provide evidence of having disseminated them to sectors, MDAs, LGs and communities as intended. v. Mobilizing resources and capacities for implementing the 2030 Agenda The Finance TWG led by MoFPED was expected to use the identified national programs and applicable targets for Uganda to assess the resources needed in terms of financing and capacity development to deliver the 2030 Agenda. This was to include reviewing and enhancing the existing arrangements for mobilising resources, knowledge sharing, technology and partnerships for implementing the 2030 Agenda in Uganda. It was observed that MoFPED was in the process of developing a domestic revenue mobilization strategy for Uganda with the aim of raising tax-to-GDP ratio from 14% to 16% by 2019/20 in line with the set target under the NDPII and medium-term Sustainable National Development Plan. However the delay by NPA in identification and integration of all SDG

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targets into the national development plans presents a risk that the current revenue mobilisation efforts may not fully address the needs of the 2030 Agenda. It was also observed that TWGs had not been facilitated to implement their planned activities.

vi. Monitoring, follow-up, review and reporting on progress towards the implementation of the 2030 Agenda The 2030 Agenda required monitoring, follow up, review and reporting processes for SDGs to be a primary responsibility of every government. This required determination of applicable indicators, establish baseline data, and review and update the M&E frameworks to facilitate effective tracking of SDG implementation. The assessment conducted by UBOS for data in collaboration with the United Nations Statistics Division revealed that only 202 out of 230 global indicators were applicable to Uganda and the TWG had nationalized the applicable indicators and incorporated the Levels I, II and III indicators into the updated NSI framework. However, UBOS was yet to establish comprehensive baseline data on all applicable targets that would be used to track progress for SDGs implementation. In addition the data gap analysis of indicators for SDGs at program/service delivery points had not taken place. Although the NSS has the capacity to cover all the 202 indicators, the current modules used can only produce data for 85 indicators, of which data on 45 indicators was fully available while for the remaining 40, data could be obtained by UBOS with additional resources.

KEY RECOMMENDATIONS i. NPA should prioritise the review of policies, strategies and processes for effective integration of SGDs. The OPM should undertake regular follow up of activities allocated to TWGs to ensure that all responsibilities assigned to TWG’s are timely executed and reported on. ii. The OPM and NPA should fast track the review and update of the enabling tools and instruments for effective implementation of SDGs. The process of agreeing and mapping applicable targets and indicators to sectors, MDAs and LGs should be expedited. iii. The oversight role of parliament should be enhanced through sensitisation and revision of existing checklists to include SDG compliance. NPA should conduct the assessment of technical capacity of planners at the different planning levels, identify the gaps and

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strengthen capacity to facilitate integrated and multi-sectoral development planning for SDGs. iv. The OPM should ensure full operationalisation of the SDGs coordination framework by ensuring full constitution of all TWGs, and quarterly progress meetings are held at all levels, reports prepared and reviewed by the respective organs. v. The MoICT&NG should fast track the full constitution and operationalisation of the communication and advocacy TWG.

OVERALL AUDIT CONCLUSION

Whereas the GoU committed to implement SDGs Agenda 2030 over the next 15 years from 2016 to 2030, formulated the SDGs Coordination framework and launched the SDGs roadmap in 2018, the existing gaps in the operationalisation of the SDGs framework pose a challenge in creating a suitable environment for their implementation. To ensure realisation of the expected benefits of the Agenda 2030, it is important that a comprehensive and supportive SDGs coordination framework and roadmap are fully operationalised and streamlined and the necessary capacities provided to all the TWGs, MDAs and LGs to allow them effectively implement their assigned roles and responsibilities.

6.3.2 MANAGEMENT OF WETLANDS IN UGANDA BY THE WETLANDS MANAGEMENT DEPARTMENT (WMD) UNDER THE MINISTRY OF WATER AND ENVIRONMENT (MWE) The Wetlands Management Department (WMD) is charged with management and protection of wetlands in collaboration with NEMA, District Local Governments and other key players. However, a decline in the countrywide wetland coverage has been reported over the years with rampant encroachment for sand mining, cultivation, settlement and industrial establishment, reports of issuance of land titles in wetlands, among others. In light of the above, the Office of the Auditor General conducted a Value for Money audit to establish the extent of reduction in wetland coverage countrywide and evaluate the adequacy of measures put in place by the Wetlands Management Department (WMD) to ensure protection and restoration of wetlands.

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KEY FINDINGS

i. Status of Wetlands Countrywide Wetland coverage dropped from 15.5% in 1994 to 13% in 2015. 50% of permanent loss happened in L. Kyoga and L. Victoria basins alone. Currently, 31% of the remaining wetlands countrywide are degraded, while 69% are intact. Almost half of degradation (46%) is in Eastern Uganda. 55% is in L. Kyoga drainage basin.

ii. Permits and Land Titles in Wetlands During the review period, NEMA issued 239 wetland user permits, but it was noted that both NEMA and WMD had limited staff to monitor compliance countrywide, while the districts were underfunded to undertake this task. In addition, it was noted that land titles were issued for 782 plots wholly or partially located in wetlands in Kampala, Wakiso and Mukono alone, meaning that this figure is much higher countrywide. WMD reported that it had shared shapefiles showing wetland boundaries with MLHUD in 2015, though no evidence of this obtained. Importantly, cabinet resolved to cancel titles in wetlands in 2016. The estimated cost of cancellation for Kampala, Wakiso and Mukono only was 6.74 billion, but no funding had been released for this by the time of audit.

iii. Restoration of Wetlands WMD’s efforts to restore degraded wetlands fell far below the ideal, with only 0.3% of the required area having been restored in the 4 years under review, leaving a restoration shortfall of 99.7% less than two years to 2020. Moreover, annual wetland degradation continues to outpace restoration rates. However, WMD’s shift to prevention of encroachment rather than emphasis on post-encroachment eviction and restoration is a step in the right direction.

iv. Demarcation and Gazettement of Wetlands WMD’s delay to gazette wetlands and complete demarcation makes it difficult to identify wetland boundaries and encourages continued encroachment. There is also potential wastage of UGX 662,841,802 due to failure to utilize all pillars and beacons purchased for demarcation.

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v. Promotion of Knowledge on Management of Wetlands WMD has not prioritized implementation of the necessary measures to acquire, disseminate and promote knowledge on management of wetlands. For instance, WMD had not developed a wetlands inventory since the year 2000. Also, the NWIS is characterised by out-dated data, relevance for only 45 districts, limited accessibility and heavy software. In addition, no evidence was provided for training of staff and stakeholders using government releases over the 4 years under review despite expenditure amounting to UGX 207.23 million. As a result, there is insufficient knowledge to guide decision-making in management of wetlands both at national and local government levels.

vi. Coordination between WMD and NEMA There was poor coordination between WMD and NEMA, characterised by unclear delineation of roles, responsibilities and expected outputs between WMD and NEMA; failure by NEMA to delegate to WMD the power to enforce compliance; differing visions of management of wetlands; conflicting decisions; gaps in information-sharing; and absence of a dispute-resolution mechanism and hierarchy of authority to step in in case of conflicts or differing positions between WMD and NEMA. However, government was taking action to improve coordination between the two agencies and more clearly define their respective roles in the revised National Environment Bill and the draft Wetlands Resources Bill.

KEY RECOMMENDATIONS To Government i. Government should consider making it mandatory to involve environment officers in the titling process right from local government level;

ii. Government should set up mechanisms to protect civil servants from pressure or undue influence from powerful actors in execution of their duties related to wetland management or issuance of titles;

iii. Allegations of corruption in issuance of land titles in wetlands should be investigated and culprits given deterrent punishments.

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iv. MoFPED should prioritise the release of funds to facilitate implementation of the cabinet decision to cancel land titles in wetlands and ensure vacation of the illegal occupants.

To WMD/ MWE i. WMD should engage MLHUD to ensure the shapefiles indicating wetland boundaries are shared with all districts/ land offices and utilised;

ii. WMD should plan for and expedite the demarcation of critical wetland boundaries to ensure they are clearly visible;

iii. WMD should train members of the Uganda Land Commission, District Land Boards and Area Land Committees on the requirements of the land and wetland laws, and what constitutes a wetland/ wetland boundary. iv. MWE should continuously engage MAAIF, MLHUD and other players to:

 Expand interventions which seek to prevent wetland (re-)encroachment by addressing the factors that lead to encroachment such as declining fertility of traditional farmlands, water scarcity, unplanned urban expansion, to other areas not covered by the GCF projects;  Implement the plan to extend irrigation infrastructure especially in rice-growing regions to encourage the farmers to leave wetlands, after which they can re-generate on their own, saving government restoration costs; v. WMD, in consultation with NEMA and other relevant stakeholders, should develop guidelines or mechanisms to ensure wetland degraders pay for the costs of degradation. vi. MWE should endeavour to complete the demarcation of remaining sections of the wetlands during FY 2019/20 using the remaining pillars and beacons as committed. vii. MWE should prioritise completion of the wetlands coding and gazettement activity. viii. The Accounting Officer MWE should prioritize compilation of an updated Wetlands inventory; ix. MWE Management should further upgrade and update the NWIS software and explore options to make it more easily accessible;

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x. The Accounting Officer (MWE) should ensure that released funds are spent on planned activities in order to meet performance targets.

xi. MWE should prioritise completion of the draft legislation on wetlands and develop a framework to govern coordination between WMD, NEMA and other key players in management of wetlands.

OVERALL AUDIT CONCLUSION Wetland coverage dropped significantly between 1994 and 2015 with the Lake Kyoga drainage basing experiencing particularly high levels of degradation and permanent loss of wetlands. Government efforts to reverse this decline during the 4 years under review had registered little success mainly due to emphasis by WMD on restoration of degraded wetlands which is expensive and does not adequately address the factors that push people to encroach on wetlands; unclear delineation of roles, responsibilities and mandates between WMD, NEMA and other key players in regulation and management of wetlands; failure to utilise all pillars and beacons purchased for demarcation; gaps in collection and dissemination of knowledge on wetlands to stakeholders to guide decision-making; failure to utilise training funds for the intended purpose; delay to fund implementation of the Cabinet resolution to cancel land titles in wetlands; and limited funding to district local governments to restore, protect and manage wetlands. On a positive note, however, it was observed that starting late in 2017, WMD had started implementing a project to address factors that encourage encroachment in 20 districts, and review of legislation to clarify the mandates and roles of the different players was in advanced stages. It is hoped that these on-going interventions, coupled with implementation of the proposed audit recommendations will go a long way in stemming the worrying trend of wetland loss and improve the management of wetlands in Uganda.

6.3.3 THE REGULATION OF UNIVERSITIES BY THE NATIONAL COUNCIL OF HIGHER EDUCATION

The National Council of Higher Education (NCHE) was established as the regulator of higher education to implement the Universities and Other Tertiary Institutions Act of Parliament (UOTIA, 2001 as amended). By the provisions of the Act, NCHE is mandated

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to guide the establishment of institutions of higher learning as well as ensure delivery of quality and relevant education to all qualified persons. NCHE has strived to achieve its mandate to ensure that sustainable quality higher education is provided at all Higher Educational Institutions in Uganda. However, there are chronic problems of staffing and inadequate research in universities2 that impede the achievement of quality education. This is coupled with the increase in number of universities. To date, the country has 9 public and 43 private universities. The overall objective of the study was to assess the extent to which NCHE has ensured that universities comply with the operational and quality standards necessary for the delivery of quality higher education in Uganda.

KEY FINDINGS

i. Monitoring and institutional audits

NCHE inadequately conducted monitoring and institutional audits during the period despite UGX 331,954,999 being provided. In the period 2015/16 to 2017/18 NCHE planned to undertake 60 monitoring visits of universities. Although management reported that they had conducted 30 monitoring visits, audit could only confirm eleven (11) monitoring visits, of which, three (3) were discussed by Council in the period. In addition, NCHE neither organised peer institutional audits nor undertook external institutional audits. This was due to inadequate allocation and utilisation of activity funds and low staffing to conduct the activity. This has led to universities continuing to run unaccredited/unrevised programmes, unreviewed charters and provisional licences, admitting students without equating their foreign study qualification, and universities providing education that is below standard and poor physical facilities. This affects the quality of higher education in the country.

ii. Conducting of tracer studies by NCHE and universities

NCHE conducted two tracer studies in 2011 and 2015 for cohorts of 2001 and 2011 respectively, contrary to the good practice of having studies conducted for cohorts of

2 NCHE 2018 annual performance report

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within 2-3 years. Moreover the studies were limited to an average of 6 universities and 16 programmes and 2000 graduates. The expected 2018 tracer study was not conducted despite UGX 90 million being budgeted in the period. The universities were also noted not to have conducted tracer studies. This was attributed to the universities not being compelled to undertake the studies. There is no information system in place to enable NCHE to track all graduates in the country. This contributes to the continuous mismatch between the needed graduate programmes and content with the labour market requirements.

iii. Minimum standards of courses of study

I also noted that NCHE had established minimum standards for only 43 (2%) of the 2,104 courses of study. By April 2016, 38 of the 43 courses had since expired and were neither reviewed nor published. This led to programmes being accredited without a check to up to date standards which may compromise the quality of programmes taught. As a result, NCHE has accredited 2,100 programmes without checking them against up to date minimum standards for courses of study.

KEY RECOMMENDATIONS The NCHE management should; i. Plan adequately, prioritize and allocate its resources, including the mandatory students’ fees collections, to conduct its statutory obligations of monitoring and institutional audits, Tracer studies and minimum standards of courses of study.

ii. Enforce compliance by ensuring that all Universities offering un-accredited and/or courses whose accreditations have unrevised submit them for review leading to accreditation and/or re-accreditation or else have their licenses revoked,

iii. Enforce the conducting of tracer studies by the universities and consider developing guidelines and simpler templates for use by universities when undertaking tracer studies, and

iv. Government should build and empower the capacity of NCHE to undertake its mandate adequately, through a renewed policy with punitive measures for non-compliance

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OVERALL AUDIT CONCLUSION

Whereas the National Council of Higher Education has undertaken specific interventions aimed at increasing the quality of higher education in universities, inadequate monitoring and conducting of institutional audits and tracer studies and non-establishment of minimum standards of courses of study have resulted in universities mounting unaccredited and out-dated programmes, operating below the required quality assurance and capacity indicators, which has an effect on the quality of higher education. It is hoped that with the appropriate stakeholder engagement and policy review, the inadequacies in the higher education sector will be reduced to enable the country to benefit from improved quality of higher education, increase in employment prospects and more competent service delivery.

6.3.4 THE IDENTIFICATION AND REGISTRATION OF PERSONS BY THE NATIONAL IDENTIFICATION AND REGISTRATION AUTHORITY Government undertook the identification and registration of persons as one of the ways to generating reliable identification data about persons living in Uganda. This information would be used for a number of purposes, such as facilitation of planning, helping strengthen security, among others. Identification and registration of persons is a mandate of the National Identification and Registration Authority (NIRA). The authority is responsible for ensuring that citizens that meet the requirements are successfully identified and registered. Although this has been done there are complaints from members of the public about significant delays in the identification and registration of persons. The Office decided to undertake a waiting time audit on the processes of identification and registration of persons. The results of the audit show that there areas of weaknesses in the timeliness with which NIRA identifies and registers persons as summarised below.

KEY FINDINGS i. There were delays in processing of applications during the period of review. The processing of new applications was delayed by an average of 156 days in 2015, 91 days in 2016 and 100 days in 2017.

ii. Applications for replacements of lost identity cards were delayed by an average of 14 days

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in 2016, and 49 in 2017. Applications for change of particulars were encumbered with an average delay of 83 days in 2016 and 37 days in 2017.

The delays were caused by a number of factors which include: i. A number of applicants faced challenges in comprehending the requirements of the enrolment forms. As a consequence, the applicants submit incomplete and inaccurate information which wastes a great deal of time at verification.

ii. Shortage of staff at NIRA caused delays at enrolment, processing of applications and distribution of finished cards.

iii. There were also delays in transmission of data by NIRA from the enrolment centres because the transmission is done manually rather than online. Similarly there were also delays in the delivery of finished cards to the collection centres.

iv. There is currently no mechanism of tracking the progress of applications within the processing system and providing timely feedback to applicants where queries were raised on applications.

These weaknesses can, however be addressed if the following steps are taken:

KEY RECOMMENDATIONS i. Management should expedite the translation of the requirements of registration into local languages to ease enrolment.

ii. Management should also liaise with the relevant stakeholders particularly the Ministry of Public Service and the Ministry of Finance to address the current staff shortages.

iii. Management should also expedite the process of procuring service providers for the delivery of enrolment data to the processing centre and delivery of finished cards.

iv. Management should expedite the process of reviewing the current processes and ensure that the system is fully automated to improve efficiency.

v. Sensitise the public about the different processes of identification and registration to enable the applicants understand these processes which will in turn save time spent to identify and register citizens.

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OVERALL AUDIT CONCLUSION Although NIRA to a large extent, has undertaken the identification and registration of persons as mandated by the Registration of Persons Act, as observed a number of weaknesses still exist within the processes of identification and registration which have resulted in significant delays in processing of the applications. These delays can be significantly reduced if the weaknesses noted by the Audit are addressed.

6.3.5 REPORT ON THE FACILITATION AND PROMOTION OF EXPORT TRADE BY UGANDA EXPORT PROMOTIONS BOARD Uganda mostly exports agricultural products which contribute 80% of her total exports. These products mainly include coffee, fish, maize, tobacco, tea, beans, and flowers among others. The country is also making progress on the exportation of value added and manufactured products, such as base metal products, cement, sugar, plastics and cosmetics3. Export promotion is a key Government priority and the Government recognises that one of the ways to improve the current balance of payments is to promote exports, ensure stable supply to target markets and ensure that exports are competitive and meet international standards. In a bid to realise this, Government has undertaken a number of initiatives aimed at promoting export growth among which was the creation of the Uganda Export Promotion Board (UEPB) to facilitate the development promotion and coordination of all export related activities. A review of the performance of this Board revealed areas that need attention if UEPB is to achieve its objective. These include those highlighted in the following key findings:

KEY FINDINGS i. It was noted that the current coordination measures were ineffective in fostering the development of export trade. There is currently no formal and clear coordination framework through which UEPB engages the other sector players. Similarly, there is no clear definition of the roles and responsibilities of the key players within the export sector.

ii. The trade and market information provided to exporters was in most cases not up to date

3 http/www.businessdirectory.com/export promotion

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while in other cases no information was available at all.

iii. There was no evidence of regular review of policies, plans and strategies in the form of policy papers, policy briefs or reports. Similarly, there was no clear system of collecting feedback about the current polices through, for example regular surveys.

iv. Some key aspects of building the capacity of exporters, such as, the implementation of the export curriculum, largely remained unimplemented. There was also no evidence that UEPB undertakes post training follow-ups to evaluate the impact of the training and offer post training support.

KEY RECOMMENDATIONS i. UEPB should spearhead efforts to put in place a proper coordination framework with the different sector players in order to harness the synergies that exist amongst the different stakeholders. ii. UEPB should ensure that funds released for provision of trade information are optimally utilised utilised for this purpose. UEPB should also find alternative ways of obtaining information about external markets rather than relying on the embassies and missions and regularly subscribe to online market and buyer information sources which provide reliable and up to date international market information. iii. UEPB should streamline the processes of reviewing existing policies and develop a comprehensive system of gathering feedback from exporters about the current export plans, policies and strategies. iv. UEPB should develop comprehensive training plans as a guide for implementing activities aimed at building the capacity of the exporters. UEPB in addition should desist from reallocating funds meant for capacity building of exporters.

OVERALL AUDIT CONCLUSION The export trade sector has to a large extent not performed to its full potential because of a number of weaknesses, such as: inadequate coordination among the stakeholders, insufficient trade and market information, inadequate review of existing policies and strategies and failure to build the capacity of exporters. This sector can, however, perform better and make a bigger contribution to the economy if the identified weaknesses are addressed.

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6.3.6 AN EVALUATION OF THE OUTPUT BASED AID PROJECT IMPLEMENTED BY RURAL ELECTRIFICATION AGENCY By 2012 only 7% of the rural Ugandan households were connected. The low level of electricity access negatively affects government efforts to boost production, create jobs, provide clean source of energy and preserve the environment. The Output Based Aid (OBA) Project, implemented by the Rural Electrification Agency (REA) was funded by a grant of USD 20.2 million, contributed by the Global Partnership on Output-based Aid (GPOBA) and other stakeholders, including the International Development Association (IDA), KfW (German development bank). The project objective was to make access to grid electricity affordable for 132,500 poor households. However during implementation REA set targets for each Licence Distribution Companies totalling 152,861 households. Under the OBA project, service delivery is contracted out to licensed service providers The overall audit objective was to evaluate the extent to which the OBA project achieved its expected outputs in due regard to the approved procedures and operations.

KEY FINDINGS i. Extent of achieving target household connections Apart from UMEME, one of the Licensed Distribution Companies (LDC), with an individual performance of 87.2%, all the other 7 LDCs did not meet their total individual target connections, all attaining less than 53% level of performance. This was attributed to project design issues, lack of capacity by the LDCs and inadequate consumer awareness.

ii. Extent to which procedures were undertaken in regard to the manual Contrary to operational guidelines I noted that LDCs did not submit all required annual work plans and budgets in a timely manner and REA management contract management reports were not fully submitted. In addition to inadequate monitoring by management against the set result indicators, segregate accounts were neither opened nor internal audits undertaken despite the project having USD 1m budget to undertake the activity. As a result management’s ability to assess, monitor and manage LDC’s performance was curtailed.

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iii. Extent to which operations were adequately undertaken. In spite of the fact that the poverty mapping consultant only identified 42,134 out of the expected 250,000 eligible households for the OBA subsidy, a performance of 16.8%, REA paid Euro 83,361.69 (about 45% of the contract price) to the Consultant. Under the consumer awareness contract, inadequacies were noted in the implementation of the contract, leading to a claim by REA of Euros 243,510.24 (equivalent to UGX 779,232,780) from the consultant. With such shortcomings, there is doubt on how beneficiaries were identified. During physical verification various inadequacies were also identified, for instance, houses which were connected beyond the 35 meters and connections made to non-qualifying households.

KEY RECOMMENDATIONS REA management should: i. Involve all the relevant stakeholders in project design to ensure that project implementation targets are met, connections are made to the intended beneficiaries and household connections are optimized.

ii. Ensure that companies that undertake project implementation submit all the required plans so that project implementation can easily be tracked and corrective measures taken in a timely manner.

iii. Ensure that it undertakes due diligence in procuring consultants and should undertake adequate contract management to ensure contract obligations are met.

iv. Follow up and enforce reporting by LDCs to ensure that the reports are produced as required by the OBA operational manual, which should inform decision making by stakeholders.

v. For future projects, consideration should be made for adequate physical verifications of connections to ensure reimbursements are made for only connections done in accordance with the specified criteria.

vi. Institute a re-verification framework IVA in order to provide quality assurance of connections before reimbursements.

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OVERALL AUDIT CONCLUSION Whereas the Rural Electrification Agency under the Output Based Aid project was reported to have achieved 75.7 % of the project targeted connections of 152,861, inadequacies in planning, procurement, financial/contract management and reporting led to lower performance of a majority of LDCs. In addition, due to shortfalls by REA management in monitoring and audit, audit could not confirm whether the project met the anticipated 10% increase in rural electrification. It is hoped that with the implementation of the new electricity connection policy that provides free household connection to all households in Uganda, the lessons identified and learnt under this study will be applied to efficiently and effectively fulfil the objectives of the new policy.

6.3.7 THE RELIABILITY OF METEOROLOGICAL INFORMATION PRODUCED BY UGANDA NATIONAL METEOROLOGICAL AUTHORITY (UNMA) Most activities done by people, particularly outdoor activities, have to be done with weather in mind and therefore it is critical to provide meteorological services that support relevant national needs, such as: protection of life and property, safeguarding the environment and contributing to sustainable development. In the recent past, the impacts of climate change, such as: unreliable rains, increased frequency of floods, landslides, drought as well as disease outbreaks and epidemics like malaria and cholera, among others, have been rampant. In Uganda, meteorological services are provided by Uganda National Meteorological Authority (UNMA) which is a semi-autonomous government institution and a Government’s authoritative voice on weather and climate. UNMA is mandated to promote, monitor weather and climate as well as provide weather predictions and advisories to Government and other stakeholders for use in the sustainable development of the country and these services are guided by the World Meteorological Organization (WMO) standards, International Civil Aviation Organization (ICAO) standards, the National Climate Change Policy 2015, and UNMA Act 2012. The Office of the Auditor General undertook a value for money audit to assess the measures put in place by the Uganda National Meteorological Authority (UNMA) to produce and disseminate accurate, timely and comprehensive meteorological information

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that meets the information needs of users. In order to achieve this, the audit assessed the procedures used by UNMA to carry out weather observations and whether they were in a manner prescribed by World Meteorological Organization standards, the process of data processing, analysis and storage and whether it was in accordance with the recommended best practices and the appropriateness of the dissemination mechanisms employed by UNMA to ensure that weather and climate products and services are received by the different stakeholders in a timely manner. The study covered two financial years 2016/17 and 2017/18 focusing on functioning manual and automatic weather stations.

KEY FINDINGS i. By audit time, only Entebbe synoptic station was observing and reporting meteorological data throughout the 24 hours as required by WMO. The other synoptic stations were operating 12 hours during day but also had failed to observe the main standard hours of times of 3 am (0000z) and 9 pm (1800z).

ii. Since February 2017, UNMA has no governing board that is responsible for recruiting and appointing staff and formulation of meteorology regulations.

iii. Except for weather equipment at Entebbe synoptic station that were calibrated in January 2017, all the other equipment in different stations had not been calibrated by audit time.

iv. Most weather parameters were being observed and reported by synoptic stations as required by WMO. However, Agromet stations were not observing and reporting soil temperature, soil moisture and evaporation necessary for agronomic applications. In addition, the hydromet stations were not observing and reporting all the parameters required by WMO. For instance Kyejonjo hydromet station only observed and reported rainfall for the two year period under study and hydro meteorological data on river water level, river discharge, suspended sediments in rivers, and water quality were not recorded.

v. Except for Entebbe aerodrome station that reported aerodrome warnings and wind shear warnings as required by ICAO, the other four aerodrome stations that is Soroti Gulu, Kasese and Arua were not observing and reporting these parameters.

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vi. By audit time, only 29 (56%) out of 52 manual weather stations were functional, 43 automatic weather stations had been installed but also they were not regularly reporting and no weather radars had been installed.

vii. By audit time, UNMA did not have a data backup system as required by WMO and only 80% of rainfall records and 40% of temperature records had been digitalized. The other weather parameters remained un-digitalized due to inadequate staff in this section, and less than 10% of the original manual weather records had been scanned.

viii. Seasonal climate outlooks were not being received by the farmers on a quarterly basis. In addition, the fishermen, especially on Lake Victoria, were not receiving weather alerts.

OVERALL AUDIT CONCLUSION Whereas meteorological services remain important in the sustainable development of the country and in reducing the environmental hazards that Uganda is currently facing, UNMA still faces challenges of inadequate essential equipment, uncalibrated equipment, limited coverage and functionality of stations and lack of high speed processing facilities, among others. The measures put in place by UNMA to produce and disseminate accurate, timely and comprehensive meteorological information are still inadequate and, therefore, UNMA’s strategic objectives are likely not be achieved.

KEY RECOMMENDATIONS i. UNMA should liaise with the relevant authorities to ensure that the appointment of the board members is fast-tracked to ensure that and substantive staff are recruited at all levels.

ii. UNMA should prioritize calibration of equipment in its budget , pursue regional collaborative arrangements with other neighbouring states for possible partnerships and also in the long run set up calibration laboratories

iii. UNMA Management should continue to plan and budget for the required equipment and instruments and also liaise with relevant authorities to ensure that stations are equipped with essential equipment and instruments.

iv. UNMA should develop maintenance and replacement plans for the existing weather stations especially rainfall stations, and ensure that regular maintenance is carried out

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v. Staff in the data processing unit need more specialised training on the use of the CLIMSOFT so that they can be in position to perform troubleshooting and regular maintenance of the software instead of relying on hired experts.

vi. UNMA should prioritize digitisation and scanning of original weather records by planning and budgeting for scanners, staff and data backup systems.

vii. UNMA should enter into service level agreements with Internet providers to ensure that regular internet connectivity is maintained for models to run effectively on the server

viii. UNMA should develop and implement a robust dissemination mechanism that will ensure all District production officers and other users receive weather and climate information in time. For instance, UNMA needs to work directly with farmer associations and fishermen groups to ensure that meteorological information is received by the individual persons in time.

ix. UNMA should implement a feedback mechanism to allow production officers and extensions workers to log in complaints and suggest areas of improvement.

6.3.8 FOLLOW UP REPORT ON THE VALUE FOR MONEY AUDIT ON REGULATION AND MONITORING OF DRILLING WASTE IN THE ALBERTINE GRABEN BY THE NATIONAL ENVIRONMENT MANAGEMENT AUTHORITY (NEMA) In 2014, my office undertook an Environment Audit on Regulation and Monitoring of Drilling Waste Management in the Albertine Graben by NEMA and a report was submitted to Parliament. The audit sought to ascertain how drilling waste was handled in the exploration phase between 2006 and 2014, since the volumes produced would only shoot up as activity entered the development and production phases. The 2014 audit found that there was inadequate waste management legislation and as a result NEMA had directed all IOCs to hold the waste in waste consolidation areas (WCAs). It also found that IOCs did not prepare and submit self-monitoring reports to NEMA within the required time frame. Furthermore, while NEMA and Lead Agencies made efforts to monitor and enforce compliance to proper waste management practices in the Albertine Graben, performance gaps were identified in this area. Finally, NEMA did not independently verify laboratory results submitted by the IOCs.

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The purpose of this follow-up was to: establish the extent to which NEMA had implemented the recommendations in the 2014 VFM report mentioned above; assess whether or not there had been improvements in management of drilling waste in the Albertine Graben; and assess whether any new recommendations were needed to ensure adequate management of drilling waste.

KEY FINDINGS The audit team noted that out of the 12 recommendations made in the Auditor General’s report of 2014, 4 were fully implemented, 6 were partially implemented while 2 had not been implemented at all. However, it is important to note that the key recommendations of the 2014 audit, namely putting in place adequate legislation for management of drilling waste, and ensuring the waste held in Waste Consolidation Areas (WCAs) is treated and disposed of were fully implemented. The National Environment Bill, revised by NEMA to cater for oil and gas, was passed by Parliament on 14th November, 2018, and was awaiting the President’s assent at the time of audit, after which the subsidiary legislation developed would be approved. However, neither NEMA nor the Petroleum Authority of Uganda (PAU) consistently collected or analysed records of quantities of liquid waste held by the IOCs in the WCAs before or after 2014 and as a result, they were unable to detected or satisfactorily explain the significant difference in the quantity of liquid drilling waste generated by TUOP at the time of the 2014 audit and the time of this follow-up.

FOLLOW-UP RECOMMENDATIONS i. The Minister of Environment should ensure that the subsidiary environmental legislation is approved as soon as possible once H.E. the President assents to the revised National Environment Act, in order to empower NEMA and the relevant Lead Agencies to adequately regulate waste management in the oil and gas sector.

ii. NEMA and PAU should investigate the cause of the discrepancy between the amount of liquid waste stored by Tullow Uganda Operations Pty at the time of the 2014 audit, and the actual amount disposed of.

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iii. In future, in cases where untreated liquid waste may be held, NEMA and PAU should periodically obtain accurate records of the quantities and analyse them to spot any anomalies and address them expeditiously.

iv. NEMA should ensure that the waste disposed of is monitored at stipulated intervals by the regulated community (IOCs/ Waste disposal firms) and NEMA staff.

6.3.9 BUDGET PERFORMANCE BY THE HEALTH SECTOR The health sector is one of the priority sectors of government that is critical in the attainment of Uganda Vision 2040 by producing a healthy and productive population that effectively contributes to socio-economic growth. The sector comprises a number of spending agencies (votes) namely; The Ministry of Health (Vote 014), National Medical Stores (Vote 116), Uganda Cancer Institute (Vote 114); Uganda Heart Institute (Vote 115); Uganda Blood Transfusion Service (Vote 151); Uganda Aids Commission (Vote 107), Health Service Commission (Vote 134), Mulago National Referral Hospital (Votes 161), Butabika National Mental Referral Hospital (Vote 162), 14 Regional Referral Hospitals (Votes 163 – 176), National Drug Authority, Joint Clinical Research Centre, Uganda Virus Research Institute, Uganda National Research Health Organization and Regulatory Councils, i.e. Uganda Medical and Dental Practitioners Council, Uganda Nurses and Midwives Council and Allied Health Practitioners Council.

Ministry of Health is the central agency in charge of policy analysis and formulation, strategic planning, provision of nationally coordinated services that include emergency preparedness, health research, and monitoring and evaluation of the overall health sector performance.The Health Sector Development Plan notes that in terms of planning, there is a major shortcoming where health sector targets and activities are set without the requisite costing of activities and allocation of required resources to meet them. Also, priorities are not adequately set, which makes it difficult to implement plans in resource constrained situations. The Government of Uganda has steadily increased its budget allocation of funds to the health sector; however, it continues to allocate less than 10% of its budget to health care, which is less than the 15% agreed in the Abuja Declaration by heads of African states. The current funding of US$ 27 per capita per annum

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expenditure on health care is far below the US$ 44 per capita recommended4. Due to the resource constraints it is imperative that the available resources are utilized effectively to deliver on the health sector objectives. The Office of the Auditor General undertook a value for money audit to assess the extent of delivery of planned outputs of eight (8) selected entities in the health sector in the financial year 2017/2018. The eight entities comprised of Ministry of Health, Mulago National Referral Hospital Complex, Uganda Blood Transfusion Services, Mbarara Regional Referral Hospital, Gulu Regional Referral Hospital, Mbale Regional Referral Hospital, Masaka Regional Referral Hospital and Fort Portal Regional Referral Hospital.

KEY FINDINGS

i. Extent of delivery of planned outputs It was observed that out of the 52 sampled planned outputs in the 8 selected health sector entities, 14 outputs(27%) were fully achieved, 18 were partially achieved (34.6%) and 11 outputs were not implemented at all (21.2%) . The extent of delivery for 9 (constituting 17.3%) of the planned outputs could not be assessed , because there were no performance targets and indicators set for the outputs. MoH which is the largest player in the sector was able to achieve 26% of its planned outputs; for the rest of the entities, the level of achievement ranged from 16.6% to 50%. For the 18 outputs that were patially achieved under various entities, the major contributing factors for partial achievement were procurement delays, budget shortfalls, delayed release of funds and diversion of funds.

ii. Planning and Budgeting Review of the certificate of compliance of the annual budget 2017/18 assessment report by National Planning Authority (NPA) indicated that the Health sector is 51.7 percent compliant. Specifically, the sector performed at 88%, 38.1%, 67.6% and 37.3% at planning, project implementation, budget process instruments (BFP and AB) and annual budget performance, respectively. The performance was on account of low budget

4 World Health Organization Profiles, http://www.aho.afro.who.int/profiles_information/index.php/uganda:health_financing_system

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absorption by the majority of health sector institutions especially under projects. In terms of strategic planning, the sector is doing well as six (6) out of the eight (8) selected entities had approved strategic plans. Also available is the approved health sector development plan which is aligned to the NDPII. However, Mulago Hospital Complex and Fort Portal RRH scored 0% at planning on account of not having approved strategic plans. It was also observed that under MoH there were a number of projects under implementation which were not among the interventions proposed in the NDPII. iii. Release/ Funds disbursement performance During the FY 2017/2018, out of the total UGX 1.95 trillion allocated to the Health Sector, UGX 1.28 trillion which represents 66% was released. All votes received about 100% of the budget except MoH which received only 36%. For the eight (8) selected entities it was observed that overall, 55.6% of the approved budget was realized by the entities. Most of the entities received their entire budgetary allocations except MoH .. For MoH, the shortfall was caused by low disbursement performance from external financing. In terms of counterpart funding, it was observed that government released all the expected counterpart funding contributions on all the externally funded projects. Due to the poor release performance especially by MoH, a number of outputs and targets were either not implemented or partially implemented. iv. Utilization/ Absorption of funds Out of the total release of UGX 1.28 trillion, the health sector spent a total of UGX 1.191 trillion representing 93.04% of the released amount. For the 8 selected entities, the analysis showed that the entities spent 79% of the amount released. The unutilized funds (UGX 99.4 billion) were mainly funds earmarked for pension, gratuity and social contribution and construction projects among others. Failure to absorb funds was attributed to procurement delays and delayed verification of decentralised pensioners in Regional Referral Hospitals.

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v. Further analysis of the performance of the selected outputs revealed that in addition to poor release performance, the delivery of the expected outputs was affected by budget variations such as reallocations, diversion/ mischarge of funds and delays in procurement. The analysis showed that for the eight (8) selected entities, on average over 50% (UGX 28 billion) of the funds released for the selected sub programs (outputs) were not spent on the planned outputs .This impacted on the achievement of the planned outputs. The Accounting Officers attributed this to resource constraints imposed by the MTEF limits issued by Ministry of Finance and the priority demands entities have to meet even where resources are not forthcoming. vi. Monitoring and Evaluation From the interviews held with project coordinators, heads of departments and Accounting Officers in the selected entities, the audit team established that there were no specific monitoring and evaluation work plans with clear set targets and indicators to facilitate monitoring of planned activities for the programs and projects selected for review. It was further noted through review of the expenditure files that although funds amounting to UGX 1,287,353,819 were spent on monitoring and evaluation of projects and programs, there were no specific monitoring and evaluation reports on file to confirm that the expected monitoring and evaluation activities were carried out and recommendations made for corrective action. vii. Performance reporting Review of the annual work plans, approved budget estimates and the 4th quarter cumulative performance reports indicated that in all the selected health sector institutions, there were some errors and inconsistencies in reporting on the delivery of outputs and in some instances there was no relationship between the planned outputs and the actual reported achievements. Also the revised approved budget figures in the Ministerial Policy Statements and cumulative vote performance reports were at variance with the actual revised budgeted figures captured in the IFMS.

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KEY RECOMMENDATIONS

i. The sector should strive to always give priority to the proposed NDPII health sector interventions and targets during planning and budgeting. The tendency to take on new projects outside NDPII projects should be restrained or undertaken in accordance with the national planning framework. ii. The Ministry should work closely with stakeholders to ensure that program activities are properly planned to facilitate timely disbursement of funds. iii. Accounting Officers should adhere to the approved budgetary allocations and work plans. Where inevitable, budget variations should be undertaken in accordance with the established procedures. iv. The sector should set realistic targets with clear performance indicators during planning and endeavour to revise the targets in case of low budget outturn caused by poor commitment from donors/Government to release all the funds as planned and in a timely manner. v. The sector should constitute M&E units to properly monitor implementation of activities, consolidate all the reports generated from the individual Programme/project monitoring teams/committees and follow up recommended corrective actions. In addition, the established units should ensure that specific M&E plans are developed with clear indicators and targets for assessing performance and ensure availability of accurate and timely information on health sector performance. vi. The sector should ensure that the performance is accurately reported to inform appropriate government policy actions.

OVERALL AUDIT CONCLUSION Overall, the selected eight (8) entities in the sector partially achieved their expected planned outputs for the year. The delivery of the expected outputs and targets was affected by challenges in planning, budget shortfalls, funds absorption, procurement delays and budget variations among others. To improve on the output delivery, it is important that the existing challenges in monitoring and evaluation are also addressed to ensure corrective action and accurate information for decision making.

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6.3.10 BUDGET PERFORMANCE BY THE WORKS SECTOR Uganda’s national transport system is comprised of road, rail, air and inland water transport modes thus the Transport sector is divided into sub sectors based on these modes. With over 90% of cargo freight and passengers moving by road, road transport is the core and dominant mode of transport. Air and rail transport modes are still growing with limited utilisation while inland water transport is less developed. Uganda Vision 2040 emphasizes that the country must urgently attain an integrated transport infrastructure network to spur its own economic growth; this will entail development of a highly interconnected transport network and services optimizing the use of rail, road, water and air transport modes. The Works and Transport sector is one of the priority sectors of Government and has been identified in the NDP II as a complementary sector which supports the key growth sectors. It is led by the Ministry of Works and Transport (MoWT) which is responsible for policy formulation, legislation, strategic planning, setting standards, regulation, and monitoring and evaluation of the Sector5. The other entities within the sector include, Uganda National Roads Authority (UNRA), Uganda Road Fund (URF), Uganda Railways Corporation (URC) and Civil Aviation Authority (CAA).

The Sector Development Plan (2015/16-2019/20) and Annual Sector Performance Report 2016/17 highlights various challenges within the sector such as inadequate funding; high costs of acquisition of land for the right of way for the development of infrastructure projects coupled with unfavourable land law which affects budget performance especially for externally financed projects in terms of project costs and completion period. Inadequate infrastructure therefore remains one of the binding constraints to the country’s economic growth with an estimated infrastructural financing gap of USD 0.4 billion per annum. In order to meet this gap, it is imperative that available resources are efficiently and effectively utilised in order to close the existing infrastructural funding gap and spur economic growth.

Due to the significant budget allocations made towards the sector, there are increasing demands for better performance and management of public resources within the sector. It is against this background that the Office of the Auditor General decided to undertake

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a value for money audit to assess extent of delivery of expected outputs by the Ministry and other entities within the sector during the financial year 2017/18. The audit focused on two entities namely: MOWT and UNRA.

KEY FINDINGS

Budget Implementation -Delivery of Expected Outputs

Out of a total of 39 sampled projects selected from 2 entities namely MoWT and UNRA, it was established that 11 outputs (28.2%) were achieved; and 20 (51.28%) outputs partially achieved. On the other hand, 4 (10.26%) key outputs were not achieved at all. Furthermore, of the 39 planned outputs, we were not able to assess the extent of delivery of outputs of 4 (10.26%) key planned outputs due to lack of adequate performance information. This assessment is consistent with the Certificate of Compliance 2017/18 by National Planning Authority which showed that, the sector was 54.4% compliant in terms of implementation of the budget. Key factors impacting on the delivery of the expected outputs for the sector are expressed below.

i. Planning and Budgeting Whereas the Sector Development Plan (SDP) is in tandem with the long-term national development goals and objectives, it was difficult to match the respective outputs in the NDPII and SDP. Additionally, in the Certificate of compliance issued by NPA 2017/18 it was observed that despite the good progress in the development of the sector plan, the plans are not translated into budget interventions necessary to achieve NDPII macroeconomic targets. It was also observed that the Ministry’s five year strategic plan is still in draft form. In the absence of an approved strategic plan for the Ministry, the Ministry and indeed the sector may not be properly directed towards the achievement of the expected outputs given that the Ministry is responsible for policy formulation, legislation, strategic planning, setting standards, regulation, and monitoring and evaluation of the Sector.

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ii. Release Performance and Absorption The sector’s approved budget for the year amounted to UGX.4.782 trillion, and UGX.4.260 trillion was released constituting 89% of the approved budget. Of the amount released, 89.4% was spent by the different entities under the works and transport sector. The budget shortfall of 11% was registered in external financing and this mainly affected UNRA where UGX 1,321,281,293,645 (68.5%) of the anticipated allocation from external financing was not realized; this was caused by appropriating funds for the critical oil roads yet at the time of budget approval, Government was still in the process of securing the funding from EXIM bank, and the process had not been finalised by end of FY 2017/2018. The MTEF figures for externally financed project are provided by the Ministry of Finance with limited input from UNRA. This created mismatch between the UNRA’s actual budget requirements and appropriation. iii. Re-allocation/virement worth UGX15 billion The Ministry made reallocations amounting to UGX 15 billion to outputs that had not been initially planned but did not adjust the planned outputs to reflect the respective changes in budgetary allocations. iv. Diversion of Funds There were instances of mischarge of expenditure to budget lines with no relation to the expenditure in question. This impacted on the financing of the planned activities resulting in some activities not being implemented. A total of UGX.281.67bn was found to have been diverted by UNRA towards unrelated activities. Accounting Officers attributed this practice to budget constraints imposed by the MTEF limits issued by MOFPED and the priority demands accounting officers have to meet even in instances where resources are not forthcoming.

v. Inherent lags or delays in the procurement system and cost variations It was observed that delays in procurement affected timely delivery of outputs. In UNRA for example, procurement delays were mainly caused by administrative reviews and sometimes bureaucratic processes to which procurements are subjected in fulfillment of the financing requirements.

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Despite funds being released for acquisition of land, there was minimal progress during the financial year 2017/2018 caused partly by disagreements over land ownership and land compensation rates. vi. Monitoring and evaluation of implemented activities The Ministry developed a Monitoring and Evaluation Framework Policy. It was however noted that although the Ministry had a number of indicators that are being used to assess its annual performance like GAPR indicators set by OPM, MoFPED indicators, and those set within the Ministerial Policy Statement among others, the monitoring and evaluation framework had proposed use of only golden indicators for the assessment of performance. In the case of UNRA, it was observed that despite its critical role in the organization, the M & E function is part of the larger Corporate Strategy Management department and with no funds specifically allocated to the M&E function. This has rendered it less effective in its day to day operations. vii. Performance Reporting There is lack of standardized indicators for assessment of performance by the sector and as a result, the indicators are stated and described differently in the various reports and planning documents.

KEY RECOMMENDATIONS

i. The sector should prioritize and budget for all those key priority interventions proposed in the NDPII and sector plans and expedite the approval of the ministry strategic plan. ii. The Ministry should ensure that the agreed arrangements for external financing are adequately planned and operationalized in time in order to address the shortfalls in external financing. iii. The Ministry should ensure that where re-allocations are approved, the corresponding outputs are adjusted to reflect the new outputs. iv. Diversion of funds should be avoided as it impacts on the implementation of planned activities. v. The Ministry should ensure that procurements are undertaken within the timelines prescribed in the procurement regulations.

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vi. The Ministry should standardize all the indicators used in performance reporting to avoid inconsistencies in performance reporting. vii. The Ministry should standardize indicator setting to enhance performance reporting. viii. The Ministry together with UNRA should continue engaging the responsible authorities to address the impediments to land acquisition for infrastructure projects.

OVERALL AUDIT CONCLUSION

Overall, the two selected sector entities partially and not fully achieved their outputs owing to various factors that included challenges in planning, budget shortfalls and absorption among others. Coupled with the gaps in the M&E function, these challenges have led to significant deviations from the annual planned activities in the sector. It is important that the sector addresses the gaps identified to improve on the achievement of the annual planned outputs.

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Part 7: SPECIAL AUDIT REPORTS

7.0 SPECIAL AUDIT REPORTS FOR 2017/18

7.1 SUMMARY OF SPECIAL AUDIT RESULTS Under the Directorate of Forensic investigations and IT I planned to carry out 36 audits. By the end of the financial year, I had concluded 25 audits leaving 11 audits outstanding. The table below refers.

Table 29: Special Audits conducted Entity Planned Audits Actual Performance as at Audits in December 31st 2018 progress International Audits* 2 3 -1

Forensic/Special Audits** 30 20 10

IT Audits 4 2 2

TOTAL 36 25 11

NB: * denotes one more international audit undertaken although not included in the plan ** denotes five more special audits than planned

SN SECTOR NAME OF DETAILS OF THE AUDIT STATUS ENTITY 1 Accountability PPDA; Cooperative audit on public procurement Report systems in Uganda with a focus on Illicit issued Financial Flows 2 Accountability MoFPED Austrian Development Cooperation to Report government of Uganda during FYs 2011/12, issued 2012/13 and 2015/16 3 Education Makerere Special investigation report into the alleged Report University misappropriation of the school practice funds at issued the College of Education and External Studies at Makerere University 4 Education Barlonyo Barlonyo Technical Institute special Report Technical investigation; issued Institute; 5 Energy UEGCL UEGCL terminal benefits verification; Reports Byaruhanga Joseph and Samuel Onapito issued (2) 6 Energy MEMD/Karuma Investigation in MEMD on Karuma Report Dam Reimbursements (paid invoices) issued 7 Health Arua Referral Mismanagement of Funds at Arua Referral Report with Hospital Hospital ADA 8 Health Lira RRH Special Audit of Lira Regional Hospital Ongoing

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SN SECTOR NAME OF DETAILS OF THE AUDIT STATUS ENTITY 9 Health sector Moroto Regional Forensic audit on expenditures of Moroto Report Referral Hospital Regional Referral Hospital issued 10 Public admin Parliament of Special audit on the cost of air tickets at Report Uganda Parliament of Uganda Issued 11 Works Ministry of Works Verification report of the terminal benefits of Mr. Report and Transport Reuben Kajwarire-former staff of Ministry of Issued Works and Transport 12 Regional African Union A report of factual findings by the African Union audits Board of external auditors in connection with the operations of the Pan African Parliament 13 Housing NH&CC NH&CC Investigation of CEO; Report issued 14 ICT UTL UTL terminal benefits verification; Ongoing 15 Public Iganga Municipal Alleged embezzlement, abuse of office and Draft report administration Council causing financial loss by officials from Iganga with PA Municipal Council: (Youth Livelihood funds) 16 Public Iganga Municipal Payment of wrong salary scales & ghost salary Report with administration Council loans, perpetuated by the municipal senior SPA account 17 Tourism Uganda Wildlife Special audit on allegations of mismanagement, Report Authority corruption, bribery and presentation of false issued financial statements against the Executive Director, UWA 18 Kole District Special audit report on the construction of Report selected roads, health and school infrastructure Issued 19 Amudat district Special audit of the construction of selected Report infrastructure in Amudat district issued 20 Nakapiripirit Special audit of the construction of selected Report infrastructure in Nakapiripirit district Issued 21 Gulu District Special audit report on the construction of boys Report dormitory at Northern Uganda Youth Issued Development Centre (NUYDC) 22 Bundibugyo Special audit on the construction of teachers Report District houses at Hakitengya community polytechnic in Issued Bundibugyo District 23 Mbale Special audit report on the construction of a Report Municipality water borne toilet at Mbale main Taxi-park by Issued Mbale Municipality 24 Lira Municipality Special audit report on implementation of Report infrastructure related works for the waste Issued compositing plant in Lira Municipality 25 Iganga district Special audit report on the construction of Report classroom blocks and laboratory at Nakalama Issued Senior Secondary school in Iganga district 26 Alebtong district Special audit report on implementation of Report selected infrastructure in Alebtong district Issued 27 Jinja district Special audit report on implementation of Report selected road maintenance activities in Issued Bugembe Town Council

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ANNEXURES

ANNEXURE 1: OTHER INFORMATION, ACCOUNTING OFFICER’S AND MY RESPONSIBILITIES Other Information The Accounting Officer is responsible for the other information. The other information comprises the statement of responsibilities of the Accounting Officer and the commentaries by the Head of Accounts and the Accounting Officer, and other supplementary information. The other information does not include the financial statements and my auditors’ report thereon. My opinion on the financial statements does not cover the other information and I do not express an audit opinion or any form of assurance conclusion thereon. In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially consistent with the financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard.

Responsibilities of Management for the Consolidated Financial Statements

Under Article 164 of the Constitution of the Republic of Uganda, 1995 (as amended) and Section 45 of the Public Finance Management Act 2015, the Accounting Officers are accountable to Parliament for the funds and resources of the Votes/Entities under their control.

The Accountant General is appointed as the Accounting Officer and Receiver of Revenue for the Consolidated Fund. The Accountant General is therefore responsible for the preparation of Consolidated Financial Statements of Local Governments in accordance with the requirements of the Public Finance Management Act 2015, and the Local Governments Financial and Accounting Manual, 2007 and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatements, whether due to fraud or error.

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The Accountant General is responsible for overseeing the Government’s financial reporting process. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements My objectives as required by Article 163 of the Constitution of the Republic of Uganda, 1995 (as amended) and Sections 13 and 19 of the National Audit Act, 2008 are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISSAI’s will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISSAI, I exercise professional judgment and maintain professional skepticism throughout the audit. I also; a) Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. b) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. c) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. d) Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the entity’s ability to deliver its mandate. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the consolidated financial

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statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the entity to fail to deliver its mandate. e) Evaluate the overall presentation, structure, and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves a fair presentation.

From the matters communicated with the Accounting Officer, I determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. I describe these matters in my auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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ANNEXURE II: SUMMARY ENTITY FINDINGS OF MDAS 2.1 Adverse Opinions Entity KEY AUDIT MATTER /EMPHASIS OF S/N BASIS OF OPINION MATTER / OTHER MATTER/COMPLIANCE MATTERS JUSTICE, LAW AND ORDER SECTOR 1. Judiciary Department • Mischarge of • Budget shortfall of UGX. expenditure UGX. 375,994,125 34,076,576,196 • Unimplemented Activities • Ineligible • Domestic Arrears expenditure o Increase in domestic arrears to incurred on UGX. 6,011,439,314 Registrar High o Under budgeting for domestic Court Account – arrears of UGX. 2,756,289,477 UGX. to cater for UGX. 3,393,243,713 5,477,134,393 • Accrued rent  Failure to remit unexpended money misstatement to the Consolidated Fund UGX. UGX. 841,604,776 2,781,289,345  Expenditure with inadequate • Doubtful supporting documents UGX. Accountabilities 5,859,176,553 UGX. 76,075,000  Missing expenditure vouchers UGX. 1,754,335,163  Irregular expenditure on facilitation allowance to staff UGX. 1,474,392,833  Incompletely vouched expenditure UGX. 823,842,243  Irregular advances to personal accounts UGX. 801,436,615  Increase in case backlog by 9.2%

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 Unauthorized procurements UGX. 7,247,112,408  Inappropriate use of the Quotation method of procurement UGX. 371,049,525  Diversion of plea bargaining and JLOS Activities funds UGX. 162,450,000  Non implementation of approved structure

2.2 Qualified Opinions S/N Entity BASIS OF OPINION KEY AUDIT MATTER /EMPHASIS OF MATTER/OTHER MATTER/COMPLIANCE MATTERS JUSTICE, LAW AND ORDER SECTOR 1. Directorate of  Mischarge of  Budget shortfall UGX.0.3bn Citizenship and expenditure worth  Non implementation of budgeted activities Immigration Control UGX.  Accumulation of domestic arrears UGX. 2,623,321,454 8,858,220,932  Under collection of NTR by UGX.1.566 billion.  Failure to constitute the Board  Over stay of staff on interdiction  Ineffective management of visa system  Lack of rent agreement with CAA PUBLIC SECTOR MANAGEMENT 2. The UNDP Funded  Questioned costs  Outstanding bank confirmations USD.18,134 Project Of of USD 12,213 Institutional

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Effectiveness Implemented By Office Of The Prime Minister

PUBLIC ADMINISTRATION SECTOR

3. Paris  Misstatement of  Outstanding Revenue Arrears / UGX Cash in Transit 419,461,724 UGX. 248,491,354  Excess Expenditure UGX.227,160,944  Lack of Budgets for NTR 4. Nairobi  Non reconciliation  Outstanding arrears of revenue of rent revenue UGX.390,465,996. collections(overst  Misstatement of Account Balances UGX ated by 30,067,218 UGX.97,901,972  Cash in Transit (overstated by UGX.26,863,909.)  Unauthorized excess expenditure (UGX 404,094,476)  Decline in rent revenue collections)  Lack of Budgets for NTR 5. Riyadh  Misstated Cash and Cash Equivalents 301.8 million 6. Tehran  Unaccounted for  Un- resolved Qualification Issues for Prior Cash In Transit Year UGX. 58, 323,838  Un-authorized Excess Expenditure UGX.  Un-supported 334,903,850) adjustment of  Unsupported Cash and cash equivalents cash and cash figure UGX. 47,790,877 equivalents UGX.  Un- explained Adjustments Journals 47,790,877  Non –Remittance of NTR UGX37,743,425

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7. Tokyo  Mischarge of  Irregular payment of rent to 2 Foreign expenditure UGX. Service staff whose contracts had not been 507,832,344 committed by Government UGX. 400,253,552  Appointment of the Contracts Committee Members not approved by the ST/PS  Irregular constitution of the members of the contracts committee with two members who are not Ugandan Nationals  Members of the contracts committee also serving as members of the evaluation committee  Irregular payment of educational allowance UGX. 49,155,000  Irregular cash payments to service providers UGX. 32,559,739 8. Addis Ababa  Mischarge of  Mischarge of expenditure UGX. 556,705,700 expenditure UGX.  Excess expenditure UGX. 913,346,776 556,705,700  Unaccounted for cash at hand UGX.  Excess 264,531,134 expenditure UGX.  Use of NTR/unspent funds at source UGX. 913,346,776 427,571,837  Unaccounted for  Government land at Lebu allocated to a cash at hand UGX. private developer 264,531,134  Irregular refund of medical issues UGX. 26,761,394  Irregular payment of education allowance UGX. 58,868,865  Expiry of contract of SFO  Irregular cash payments to service providers UGX. 443,018,372  No evidence of appointment of members of the contracts committee

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 Irregular composition of the membership of the contracts committee (one Ugandan and 2 Non-Ugandans)  Contracts committee performing roles of the evaluation committee HEALTH SECTOR 9. Ministry of Health  Diversion/Mischarg  Unspent balances UGX.3,641,516,554 e of Funds UGX.  None Alignment of the Ministry’s budget with 4,811,238,710 the National Development Plan  Domestic arrears UGX.42,597,252,938  Improvement of Health Services at Mulago Hospital and the City of Kampala Project (MKCCAP) o Omission of essential components of works during planning and design review o Delayed execution of works o Validity of contractor’s all risk policy o Unspecified percentage for Subcontracting of works o Non recovery of Advance Payment worth UGX.251,848,338, and retention worth UGX.628,710,846 o Implementation and Payment of some Addendum Works before Contractual Approval by contracts committee o Payment for unexecuted works USD.221, 142.63 o Delayed payment of VAT and IPCs USD. 903,954.53 o Lack of detailed measurement sheets

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o Exaggerated rates for whole sum demolitions potential saving of UGX.80, 156, 800. o Lack of a maintenance plan for implemented Infrastructure o Inspection of works was carried out from 15th April 2018 to 30th May 2018 in the presence of Consultant and the Contractor’s representatives. The following observations were made; o Cracked terrazzo works. o Poor bonding of tiles to walls o Failed sections in compaction for driveway works o Collapse of existing retaining wall behind Block J (Plant room) o Improper disposal of demolished works o Unpaved section at gate house (and several other locations on site) o Silted drains at gate house, and block H o Broken Window panes at several points o Ponding at roof on block H – Pathology. o Poorly placed window at block H, level 1 o Poorly installed window behind level 1 at block H, (before mortuary outdoor AC units) o Poor concrete haunching behind kerbworks along Block F-extension

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o Silted concrete U-drain, and ponding at road section in front of Plant room. • Transfers to National Medical Stores not Accounted for 10. Gulu Regional  Unaccounted for  Unimplemented budget activities Referral Hospital Funds UGX.  Inadequate Controls Surrounding 583,965,423 Management of Domestic Arrears – UGX 1,649,847,321  Unacknowledged Withholding Tax Remittances - UGX 111,598,776  Diversion of funds meant for construction of 54 Unit staff houses - UGX 146,500,000  Lack of Key senior staffs  Underpayment of Disturbance Allowances to staff UGX. 11,560,043  Non-Tax Revenue (NTR) spent at source UGX 119,264,740   Condition of medical equipment  Lack of updated inventory register for medical equipment  Failure to maintain/Repair essential medical equipment  Failure to use Equipment due to lack of Consumables

11. Lira Regional Referral  Mischarged  Non Tax Revenue (NTR) Spent at source - Hospital Expenditure - UGX.15,475,663 UGX.167,904,869  Over statements of Benefits Expenditure -  Unaccounted for UGX.170,282,724 funds -  Unsupported Payables/Domestic Arrears - UGX.136,359,356 UGX.157,916,520

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 Undisclosed  Understaffing Expenditure -  Condition of Medical Equipment UGX.298,206,573  Failure to plan for Consultancy Services  Overstatement of Net worth -  Failure to provide a Performance Security UGX.108,735,083

12. Mbale Regional  Unsupported  Unsupported domestic arrears Referral Hospital Gratuity Payments UGX.752,666,672 UGX.695,585,680  Shortfall in Central Government Grants  UGX.141,57,943  Understaffing  Irregular Payment of Salaries to Retired Staff  Lack of land titles  shortage of medical equipment, (Condition of the Medical equipment )  There was no fridge for storage of dead bodies (State of the Hospital Mortuary) 13. Mubende Regional  Mischarged  Budget shortfall of UGX.1,057,562,572 Referral Hospital Expenditure  Non construction of the paediatrics and UGX.777,764,898 medical wards  Un-supported  Domestic Arrears UGX.1,543,294,611 Receivables  Poor Condition of Medical Equipment UGX.215,408,183  Poor maintenance of Medical Equipment

14. 

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2.3 Unqualified Opinions S/N Entity KEY AUDIT MATTER /EMPHASIS OF MATTER/OTHER MATTER/COMPLIANCE MATTERS

JUSTICE, LAW AND ORDER SECTOR 1. Ministry Justice & Const. Affairs Ministry of Justice and constitutional affairs  Budget Shortfall UGX. 3,397,491,601  Unimplemented Activities  Outstanding court awards and compensations and other domestic arrears UGX. 663,992,322,002  Contingent Liabilities and guarantees UGX. 7,294,546,681,169  Failure to enforce collection of revenue due from cases won by Government UGX. 20,609,131,791  Mischarges of expenditure UGX. 124,775,000  Non-prioritization of cases attracting high interest UGX. 123,670,379,996  Staffing gaps-key unfilled positions include Directors, commissioners, and state attorneys

Administrator General  Garnishee Order Bank Transfer UGX. 303,548,156  Functions of the Administrator General – Administrator General is considered a Director reporting to Solicitor General. This is inconsistent with the regulations which require the Administrator General to be a Corporation sole by the name of the Administrator General of Uganda with perpetual succession and an Official Seal.  Inconsistencies in Establishment in the Directorate of the Administrator General – approved structure not consistent with Administrator General’s Act.

2. UNDP Projects- Rule of Law and  No Issue Constitutional Democracy

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3. Support To Justice Law & Order  Revenue Shortfall of JLOS/SWAP UGX. 14,721,258,439 Sector Program  Under absorption of funds UGX. 9,187,548,674  Under funding of JLOS Secretariat UGX. 1,195,241,837  Judiciary – Diversion of JLOS SWAP funds UGX. 599,417,382  Unimplemented Activities under MoJCA, ODPP, ULRC, JSC, LDC, MoLG and DCIC.  Delayed utilization of released project funds by DCIC UGX. 803,585,571  UHRC – Delayed construction of Gulu Regional Offices  Failure to prepare and submit quarterly performance reports 4. Directorate of Public  Budget shortfall UGX. 1,302,834,578 Prosecutions  Unimplemented activities  Slow roll out/ expansion of PROCAMIS to ODPP Upcountry stations  Low case clearance rate - ODPP performed inadequately with a case disposal rate of 8% compared to previous financial years when performance stood at 25% in 2015/2016 and 11% in 2016/2017 respectively.  Land issues – ODPP RSA Residence in Kapchorwa was constructed on land under contestation of ownership  Staffing shortages 59% 5. Uganda Police Force  Non implementation of budgeted activities  Accumulation of domestic arrears UGX. 161,047,166,761  Mischarge of expenditure UGX. 1,054,937,758  Inadequate provisions for maintenance of existing fleet  Lack of an approved fleet management policy  Inadequate controls for fleet operational costs  Delays in some construction projects such as Natete police station  Un surveyed and untitled police land leading to encroachment  Non-operationalization of the Crime Records Management Information System (CRMS) and Suspect Profile System (SPS)  Un satisfactory performance in the investigation of crimes reported (only 22% successfully investigated and taken to court)

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6. Uganda Prisons Services  Budget short fall UGX.20bn  Non implementation of budgeted activities  Accumulation of domestic arrears UGX. 76,889,606,741  Mischarge of expenditure UGX. 717,886,075  Under collection of Non- Tax Revenue (NTR) by UGX. 16,755,347,833 (62%)  Un-accounted for land at Luzira-106.692 acres  Untitled and unsurveyed land  land with encroachments, disputes and encumbrances at Arua, Namalu, Amita, Ngenge, Ragem, Kotido, Bukedea and Budaka  Failure to fully operationalize the Human Resource Management Information system (HRMIS)  Overcrowding in prisons  Over-stay of prisoners on remand

7. Ministry of Internal Affairs  Budget shortfall UGX.1.15bn  Non implementation of budgeted activities  Irregular accumulation of domestic arrears UGX. 132,097,495  Mischarge of expenditure worth UGX. 145,290,468  Payment of advances into personal accounts UGX. 196,274,547 

8. UNDP Projects- Peace and  No Issue Security for Systems Resilience implemented by Ministry of Internal Affairs 9. Directorate of Government  Budget shortfall UGX.0.27bn Analytical Laboratory (DGAL)  Non implementation of budgeted activities  Loss of equipment UGX. 26,386,790  Non-operationalization of regional labs  Accumulation of case back logs  Staffing gaps (64.5%) 

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PUBLIC SECTOR MANAGEMENT 10. OPM  Budget shortfall of UGX.10.96bn  Unimplemented activities  Inadequate controls surrounding management of domestic arrears-arrears incurred arrears outside the approved estimates appropriated by Parliament(UGX. 61,715,807)  Mischarged expenditure-UGX. 393,803,386  Sustainability of Integrated Intelligent Computer (IICS) project under the Prime Minister Delivery Unit  Failure to fund capital budget of Northern Uganda Youth Development Centre(NUYCDC)  Lak of a Strategic Plan for NUYDC  Lack of Land titles for NUYDC  Failure to deduct NSSF worth UGX.11,565,000  The KASIIMO initiative under the Luwero-Rwenzori Triangle program-Lack of verifiable database, Manual Veteran database

11. NUSAF III  Under absorption of funds advanced for project activities (UGX. 66,46bn  Unimplemented budgeted activities  Un accounted for Subproject Grants - UGX.0.72bn  Unaccounted for district operation funds - UGX.0.097bn

12. MOLG  Budget shortfall of UGX.5.3bn  Inadequate controls surrounding management of domestic arrears UGX. 31,88 bn  Wrong categorization of scientists  Management of District Revolving Fund (DRF);  Absence of Memorandum of Understanding (MoU)  UGX.740,931,594 of lent funds had not been recovered from the districts  Diversion of fund monies to other Ministry activities- UGX.278,752,347  Absence of a comprehensive database of Local administrative units

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 Absence of a strategic plan

13. The UNDP Funded Project of  No issue Inclusive and Sustainable New Communities In Uganda

Implemented By Ministry Of Local Government

14. MoPS  Budget shortfall of UGX.1.8 bn  Under collection of Non Tax revenue at Civil Service College- UGX.0.21bn  Inadequate controls surrounding management of domestic arrears GX. 1.24bn  Failure to fully decentralize pension management  Under staffing in Government-gap of 157,229 representing 34% of government posts across MDAs/LGs  Retired persons on the active payroll-1,674 still on active payroll as per June 2018 payroll  Irregular employment of pensioners on contract terms  Inconsistencies in IPPS employee records such as wrong dates of birth, appointment dates earlier than dates of birth  Lack of automatic notification of employees retirement due dates on the IPPS  Delayed in solving queried files  Multiple payments of gratuity 15. UMMDAP  Budget shortfall of UGX. 4.9bn  Unimplemented budget activities  Outstanding VAT arrears - UGX.6,184,417,820  Diversion of project funds-UGX. 40,563,582  Delayed completion of additional civil works for Nyendo Market  Performance as per the logical framework-additional works on Nyendo market stalled

16. MATIP II  Under absorption of funds advanced for project activities UGX.22.15bn  Unimplemented budget activities

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 Construction of Markets-some works below target of 15% for all markets  Diversion of Project Funds- UGX.127,538,713  Shortfall in GOU counterpart funding of UGX.1,734,218,331 representing 62% of budget

17. DOCTOR DIP  Under absorption of funds advanced to districts to undertake official activities UGX.2.59bn  Unimplemented budget activities  Delayed Implementation of sub projects  Advance to Personal Accounts to undertake project activities- UGX. UGX.629,311,633

18. PRELNOR  Budget shortfall of UGX.3.19bn  Discrepancy between the project’s and Ministry’s budgets on GoU counterpart funding- UGX.417,593,000  Diversion of GOU counterpart funding contribution to non - project activities- UGX.113,954,732  Delay in acquisition of land for the construction of eight (8) satellite and three (3) bulk markets  MoU with District Farmers Association (DFA)-Under performance as per the annual performance targets with the District Farmers Association (DFA)  MoU with District Farmers Association (DFA)  Under performance as per the annual performance targets with the District Farmers Association (DFA)  Delayed procurement of walking tractors  Project performance against the Logical framework-partial/ non implementation of some activities

SECURITY 19. Ministry of Defence and  Budget shortfall UGX.71.37bn Veterans Affairs  Un Implemented budget activities  Non- compliance with commitment control procedures UGX.654bn

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 Under-Budgeting for Domestic Arrears (Outstanding domestic arrears were UGX. 764,230,132,962 yet budget was UGX.145,592,926,044

 Irregular Patient Referrals to Nakasero Hospital  Unjustifiable Compensation for land occupied by UPDF at Usuk, Ngariam, Katakwi District  Un justifiable Payment to Pajimolugwar clan and Pajimokal clan in respect of land – UGX.1,756,170,429

 Un justified Payment of Land at JIE Block 4, Plot 21, Nakapirimor, Kotido District – UGX.3,327,577,000

 Un justified Land compensation for Plot 20 Lugard Avenue, Entebbe – UGX.575,000,000  Incomplete works at Peace Support Operation Training Centre (PSO TC)-SINGO  Abandoned motor vehicles at Peace Support Operation Training Centre (PSO TC)-SINGO

 Abandoned Kaweweta construction sites works– UGX.3.1 billion  Incomplete Renovation works on the Administration Block at Lugazi  Land disputes at Kimaka  Failure to implement Presidential directive  Doubtful Supply of Jet Ranger spare parts by YAMASEC Ltd – USD.479,030.12  Doubtful Fuel supply by Hared Petroleum Limited

20. State House  Un Implemented Budget activities  Non- compliance with commitment control procedures UGX.6.161 billion 21. Office of the President  Budget shortfall UGX.0.32bn  Under absorption of funds UGX.1.16bn  Unimplemented Budget activities  Non -compliance with commitment control procedures UGX.49.bn

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 Under-Budgeting for Domestic Arrears UGX. 42,708,736,813  Limited Transport Equipment for RDCs and DRDCs  Insufficient Office space for newly created districts  Non Assessment of the impact of Patriotism programs

AGRICULTURE 22. Ministry of Agriculture Animal  Budget shortfall UGX.22bn Industry & Fisheries  Unspent funds 0.57bn  Unimplemented activities  Non-compliance with commitment control procedures UGX.27bn  Under budgeting for domestic arrears UGX.27bn  Untitled land in Kalangala and Buvuma under VODP  Lack of Performance indicators (Single Spine Extension System)  Slow recruitment process in Local Governments (Single Spine Extension System)  Missing land title and loss of land to Government entities (Bukalasa Agricultural College)  Loss of property due to fire (Bukalasa Agricultural College)

 Failure to facilitate Demonstration and training activities at National Farmers Leadership Centre (NFLC)

 Defunct Hatchery Lab/ Aquaria (Fisheries Training Institute)

 Poor state of the boat yard (Fisheries Training Institute)  Asbestos roofing materials (Fisheries Training Institute)

23. Vegetable Oil Development  Budget shortfall UGX.51.6bn Project 2  Unimplemented budget activities  Failure to finance operations-Kalangala Oil Palm Growers Trust  Outstanding advances to farmers UGX.28bn  Failure to transfer recovered funds to the UCF UGX.4bn  Overall Performance as per Logical Framework  Shortage of land needed by BIDCO-Buvuma Island  Wasteful expenditure on acquired Land- Buvuma Island

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 Failure to utilise acquired land by BIDCO- Buvuma Island  Inadequate Project monitoring 24. Agriculture Cluster Development  Budget short fall UGX.14.8bn Project  Low absorption of funds UGX.30.14bn  Unimplemented budgeted activities 25. ATAAS (Grant) EU, WB and  Non-implementation of budgeted activities Danida - MAAIF  Under absorption of funds 8.9bn  Overall Performance as Per the Logical Frame work  Implemented practices significantly below the planned targets (Sustainable Land Management)  Delayed Disbursement of Funds to institutes  Delays in the procurement process 26. Regional Pastoral Livelihood  Budget shortfall UGX.7.01bn Improvement Project  Under absorption of funds 32.6bn  Non-implementation of budgeted activities  Irregular payment of VAT on exempted supplies – UGX.139,703,172  Failure to supply vaccines  Delayed deliveries  Failure to deliver on second contract  Irregular transfer of District Project funds to General Fund Account  Delayed procurement process for Consultancy services for the design and construction of livestock watering facilities  Inadequate Project Monitoring  Delayed Disbursement of Funds to Implementing Districts  Unimplemented Activities(Inspection in Katakwi District) 27. Multi Sectoral Food Safety &  Low Absorption funds-UGX.0.18 bn Nutrition Project  Irregular payment of VAT for exempted Projects UGX.0.2bn  Irregular transfer of Project Funds to Iganga District General Fund Account (TSSA) UGX.0.209bn  Non-compliance with the Project Appraisal Document guidelines-Bugiri District  Insufficient Project Monitoring  Failure to conclude on monitoring indicators

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28. Enhancement of National Food  Budget shortfall UGX.4.36bn Security  Under absorption of funds UGX.0.76bn  Non-implementation of budgeted activities  Failure to hold Project Steering committee meetings 29. USAKSS  Non-implementation of budgeted activities TOURISM SECTOR 30. Ministry of Tourism, wildlife and  Budget shortfall UGX0.8bn antiquities  Non-Implementation of planned activities  Low Absorption of funds – UGX0.26bn  Inadequate controls surrounding domestic arrears UGX.3.6bn  Mischarge of Expenditure - UGX.0.045 bn  Lack of policy and regulatory guidelines for museum and monuments  Manual System for the Museum this has made records prone to errors and sometimes difficult to access  Lack of space for displaying several artifacts  Unmapped and un-gazetted cultural sites  Lack of funding for research and promotion of Museum activities  Lack of Land titles for Museums  Incomplete Asset Register  Staffing Gaps  Lack of Approved Strategic Plan for Affiliated Institutions  Lack of Training Plan-UGX.0.088bn TRADE SECTOR  31. Ministry of Trade, Industry and  Budget short fall UGX.21bn Cooperatives  Non-Implementation of planned activities  Non- compliance with commitment control procedures UGX. 12bn  Under budgeting for domestic arrears UGX. 12.1 bn  Mischarge of expenditure UGX.0.039bn  Delays in verifying and consolidating compensation claims for Cooperative Unions

160

 Failure to align the Ministry’s Planning and Budgeting processes towards achieving NDP11 strategic sector objectives 32. Great Lakes Trade Facilitation  Budget shortfall UGX.1.3bn project  Non-Implementation of Budgeted activities  Delays in counter-part project financing by GOU  Failure to sign an MoU between MoTIC and MoWT  Failure to implement an Integrated Financial Reporting System  Status of the Aide Memoire on the implementation support mission May, 2018. 33. Trade Capacity Enhancement  Inadequate utilization of the consultancy reports - UGX.0.12bn Project (TRACE)  Delayed implementation of the Project  Lack of inspection reports for motor vehicle repairs – UGX.0.017 bn 34. District Commercial Services  Irregular transfer of Project closing balances – UGX.0.002bn Support Project (DICOSS)  Incomplete production of documentary Video - UGX.05bn  Non-deduction of tax – UGX.0.001bn  Lack of Pre and Post inspection reports – UGX.0.011bn

ENERGY SECTOR 35. ERT PCU  Budget shortfall  Under absorption of Funds- USD 899,628.45  Delayed implementation of ERT III planned activities 36. ESDP  Budget Shortfall  Unauthorised excess expenditure 37. MEMD  Implementation of Budget approved by Parliament  Alignment of Budget Instruments to the National Development Plan II  Default on payment of Annual Mineral Rent fees  Undistributed Royalties  Mischarge of Expenditure  Funds Not accounted for  Conflict Between Loan Agreement, Power Purchase Agreement and Generation and Sale Licence  Thermal Power Subsidies/Capacity Charges

161

 Delayed completion of Projects  Failure to implement the ICGLR Lusaka Declaration 38. Energy For Rural Transformation  Slow implementation of the project work plan III Implemented By PSFU

39. Uganda Clean Cooking Supply  Failure to obtain direct funding from GoU Chain Expansion Project (PSFU)

40. UNDP Project- Improved  No Issue Charcoal Production 41. Energy Fund  No Issue 42. SMOGU  Revenue Shortfall and Unspent Balance 43. Petroleum Fund  Delayed Remittance of Petroleum Revenues  Funds withdrawn from the Petroleum Fund  Delay to establish the Petroleum Investment Framework 44. Fuel marking  Budget shortfall  Failure to update the National Petroleum Information System (NPIS)  Unguided mechanisms for identification of new fuel retail outlets LANDS SECTOR  45. MoLHUD  Delayed settlement of domestic arrears worth UGX.31,031,981,001 as at 30th June 2018  Non–alignment of the Ministry budget with the NDP II)  Failure to achieve the planned/ intended outputs  Immeasurable and non – time bound target activities /outputs  Mischarge of Expenditure of UGX.202,140,410  Funds not accounted for of UGX.114,875,000  Revenue Shortfall i.e budget of UGX.87,587,613,316 but only UGX.68,364,555,397 was released  Staffing gaps  Lack of IT Strategic plan and ICT Management Arrangements 46. Albertine Region Sustainable  No issue Development Project

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47. Uganda Support for Municipal  Under-absorption of funds by the Municipal Councils. The total Infrastructure Development un-spent balances of UGX 95,006,243,857 (MCs) (USMID)  Under-absorption of funds by the Project Support Unit. UGX.6,722,829,229 remained unutilized (PSU) 48. The UNDP Funded Project of  Unverified bank balance Conservation And Sustainable use of the threatened Savannah Woodland In Kidepo Critical Landscape In North Eastern Uganda Implemented By National Environment Management Authority

WATER AND ENVIRONMENT SECTOR

49. Ministry of Water and  Implementation of Budget approved by Parliament i.e out of Environment UGX 318.819 billion in Central Government Grants released to the entity, funds amounting to UGX 0.774 billion remained unspent at the year-end  Domestic Arrears i.e only UGX. 7,470,000,000 budgeted but settled UGX. 70,762,775,313

 Collection of NTR not budgeted for i.e NTR of UGX.826, 315,331  Nugatory Expenditure i.e interest charges totalling to UGX 803,111,726  Mischarge of Expenditure to the tune of UGX 432,857,655  Failure to undertake feasibility studies and EIAs 50. Water Management and  NIL Development Project

51. UNDP Project-Inclusive Green  NIL Growth

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52. Water and Sanitation  Revenue shortfall i.e only UGX.13,570,088,440 was received Development Facility -Eastern resulting into a shortfall of UGX.7,616,911,560 representing (2017/18) 36%  Delayed completion of Namwiwa Town Water Supply System and Kamuli Faecal Sludge Management Facility  Delayed completion of Bulegenyi Town Council water supply system  Failure to recover connection fees from Local Governments  Failure to operationalize Namagera Town Water Supply System (TWSS) 53. Water and Sanitation  Budget on the GoU component of UGX.9,662,000,000, of which Development Facility -South only UGX.9,033,240,721 was realised leading to a funding gap West (2017/18) of UGX 628,759,279(7%)  Delayed Completion of Projects  Lack of Land titles for water Scheme  Under absorption of funds i.e received funding of UGX.9,033,413,054 of which only UGX.8,518,800,507 was utilized leaving a balance of UGX.514,612,547 (6%) 54. Farm Income Enhancement and  Submission of an un-approved format of Financial Statements Forestry Conservation  Revenue shortfall and low absorption of the GOU Counterpart Programme (FIEFOC) funding  National Project Coordinator (NPC) was not in charge of all payments under the GOU component  Slow progress of construction works  Slow implementation of the Agribusiness Development component 55. Technical Assistance Under  Failure to absorb Grant funds UGX.0.425bn JWESSP  Inadequate Management of Water Schemes  Unappropriated Financing. UGX.1.997bn 56. Water Supply And Sanitation  Increase in outstanding receivables i.e increase from from UGX Programme support (WSSP) I 20,944,986 in the prior year to UGX.0.032bn under JWESSP  Lack of Land titles for Water Schemes 57. Water Supply And Sanitation  Revenue shortfall of UGX.11,254,934,070 (19%). Programme support (WSSP) II  Lack of land titles for Water Supply Systems under JWESSP

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58. JPF Consolidated  Increase in domestic Arrears from UGX.146,378,000 to UGX.16,590,774,275  Failure to refund tax paid out of the JPF funds i.e UGX.74,905,000  Non-disbursement of the Donor Funds amounting to EUR.1,703,000  Unimplemented activities due to Budget shortfall of shortfall UGX.10,362.  Lack of Land titles for Water Schemes  Under funding of Water Management Zones i.e received UGX 4.59Bn out of UGX.5,77bn budget 59. Reduction of Emissions from  Failure to implement planned activities Deforestation Forest Degradation  Use of an inappropriate procurement method for air tickets project (REDD+) 60. Lake Victoria Environment  Shortfall in Project financing i.e over the project tenure which Management Project (LVEMP) ended 30th June 2018, only 26,339,756.02 was disbursed, leading to a shortfall of USD.1,160,245 (IDA – USD.773,317 and GoU - USD.386,928).  Destruction of project structures and equipment  Advance payment to Contractor i.e entire contract amount of Euros 936,818.5 paid to the contractor before delivery 61. Switch Africa Green Project -  Non - Implementation of the planned project activities CLIMATE CHANGE UNIT 62. Investment Plan Preparation  Delayed Disbursement of project funds USD 126,906 Grant for the Strategic Plan for Climate Resilience 63. Nyabweya Forestry College  Irregular giveaway of land  Slow progress in handling the Enabling Legislation  Delayed finalization of Water connections  Staffing Gaps  Lack of Board of Survey Report 64. Water Management and Dev't  Low absorption of project funds i.e only USD.39,383,706 of Project – Ministry of Water and USD.55,210,508 absorbed Environment  Non-implementation of planned projects

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 Presentation of Financial statements in an improper format 65. Global Environment Facility  Increase in working Advances to UGX 0.562bn PROJECT- WATER (Additional  Revenue Short fall UGX.4.944bn Funds to WSSP1)  Low absorption of disbursed funds UGX.3.398bn 66. Multi- Lateral Lakes Edward &  Delays in Project Implementation Albert Integrated Fisheries &  Failure to implement planned activities Water Resources Management (LEAF II) 67. WSDF-E (2016/17)  Failure to achieve planned consumer connections i.e only 813 of the 1,205 made  Delayed Payments to Contractors 68. WSDF-South West (2016/17)  Delayed Completion of Ishongororo Feacal Sludge Treatment Plant EDUCATION SECTOR 69. Makerere University  Budget Performance (Non-Tax Revenue shortfall of UGX.3,091,253,200.  Graduating Students with tuition arrears (UGX 214,040,650)  Outstanding Rental Fees UGX 737,195,025  Funds not accounted for (UGX.181,570,073)  Encroachment of Land  Vacant and Undeveloped Land  Untitled Land  Staffing Gaps (1569 positions 36% vacant)  Inadequate Allocations to Library (0.21 of Budget)  Unclear status of Sponsored staff /55 failed to complete studies in time 70. Norwegian Programme For  Retirement of advances / accountability ( Not being accounted Capacity Development In Higher for between 14 -60 days after completion of activity) Education And Research For  Lack of Budgetary Control Mechanism Development (NORHED-MUK)  Flouting of Procurement Regulations

71. SIDA Bilateral Research  Weaknesses in implementation of Navision accounting Program- Makerere software (Navision DRGT Live)  Incomplete budget set up in Navision DRGT Live software

166

 Under funding UGX.8.103bn (Non Compliance with specific agreement on research collaboration between Sweden and Makerere University  Unaccounted for advances UGX.0.031bn  Makerere -SIDA program operation weaknesses  Unremitted UGX.0.036bn 72. Makerere University Regional  Delayed implementation of the project. Centre For Crop Improvement  Inter project borrowing (MARCCI)  Unsupported balances in Statement of reimbursable eligible expenditure program USD 55,628,894 73. Africa Centre Of Excellence In  Delayed implementation of the project Materials, Product Development  Supply of Computers for Project staff under MAPRONANO ACE And Nanotechnology Project- Batch II Lack of Performance indicators (Single Spine (MAPRONANO) Project Extension System)

74. MUBS  Budget PerformanceUGX.987,344,450 in respect of NSSF arrears not budgeted for.  Domestic Arrears / UGX. 10,793,305,009 accumulated  Un- remitted functional fees to Makerere University (UGX.5,249,625,646  Failure to honor Bonding Agreements by Government Sponsored Staff  Irregular Salary payments (UGX.274, 612,797  Non recovery of Utility Costs From Contractors (UGX. 392,294,857)  Inadequate fund allocation to the Library  Understaffing (1,517(60% vacant)  Award of Contract in Foreign Currency 75. Uganda Management Institute  Domestic Arrears/Accumulated UGX.4,279,801,852  Accumulated Receivables UGX 5,055,742,547 76. Kyambogo University  Budget shortfall UGX. 2,618,528,260 (2%).  Accumulation of domestic arrears UGX.11,050,752,481  Under collection of Invoiced revenue UGX 4,684,030,407  Funds not accounted for UGX. 387,211,784  Illegal occupancy of University land

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 Undeveloped Land  Illegal Occupancy of University facilities for business  Under collection of Rental fees from Tenants UGX. 279,867,449-  Inadequate budget allocation for the Library function 1%-  Staffing Gaps (48%) 77. Kyambogo University NORHED-  Non-confirmation of receipt of funds UGX. 0.069bn MVP Project ( Rehabilitation and Masters in Vocational Pedagogy)

78. Kyambogo University NORHED-  No issue Enabel Project

79. Lira University  Outstanding fees obligations-Ugx.135,768,608  Understaffing of Academic Staff-65%.  Procurements without Contracts Committee approval- Ugx.100,065,500  Irregular award of micro procurements  Inadequate budget allocation for the Library-0.7%. 80. Kabale University  Under absorption of funds-Ugx. 2,168,605,846 (10.7%).  Accumulation of domestic arrears-Ugx.2,059,154,568.  Understaffing of Academic Staff-78%.  Inadequate Infrastructure  Inadequate budget allocation for the Library-0.5%. 81. Soroti University  Implementation of Budget approved by Parliament- under absorption by UGX. 1,700,840,349  Single sourcing of a legal firm  Delayed Enrolment of Students  Occupancy of University Land 82. Mbarara University of Science  Revenue shortfall-Ugx. 1,316,226,685 (2.8%) and Technology  Under absorption of warranted funds- UGX. 4,186,655,777 (9.3%).  Weak Grants Management System  Academic Staffing Gaps -606 (70%)  Illegally Operating Businesses at University Campus

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 Delayed procurements  Inadequate Budget Allocation For The Library-0.3% 83. The Pharm-Biotechnology And  Under absorption of funds USD.282,102 Traditional Medicine Center  Unapproved Expenditure USD 16,931 Eastern And Southern Africa  Overpayment of Allowances UGX. 234,928,300 Higher Education Centers Of  Lack of Strategic Supervision of the Project Excellence II Project

84. Busitema University  Budget shortfall UGX.1, 032,952,504 (2.8%)  Loss of public Assets UGX.1,211,056,050  Long outstanding receivables UGX.246,527,500  Under-utilization of Land  Staffing gaps 2,539 (85%)  Inadequate Funding for Research -1.4%  Inadequate Budget Allocation for the Library Function -1.4%  Failure to Maintain Student Class Attendance Registers  Non-involvement of External Examiners In Examinations Management 85. Muni University  Under performance of Non Tax Revenue(NTR) collections Ugx.506, 356,743 (54.4%).  Mischarge of expenditure UGX 58,129,306(0.47%).  Staffing gaps in Academic departments-78 (71.4%)  Undeveloped Land  Inadequate Budget allocation to the Library function 1.9%  Unauthorized Diversion of Living out Allowance- Ugx.223,678,184 86. Ministry of Education and Sports  Revenue shortfall-Ugx. 9,787,625,760 (4%)  Under absorption of warranted funds-Ugx.2.13Bn. (0.87%).  Under release of Akii-bua stadium project funds-Ugx.1, 058,415,846. (38%).  Delayed execution of construction of National High Altitude Training Centre (Kiprotich)  Irregularities in development of Secondary school program  Accumulation of Domestic Arrears UGX. 20,743,534,855  Outstanding receivables. UGX. 21,609,448,397

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 Mischarge of expenditure UGX. 2,329,121,943  Un- accounted for advances UGX. 1,020,192,142  Nugatory Expenditure UGX. 798,940,237  Loss of Funds UGX. 190M 87. African Centre For Agroecology  Failure to Bank Externally Generated Funds on a Project And Livelihood Systems Designated Bank Account (ACALISE)

Implemented By Uganda Martyrs University Under Africa Higher Education Centres Of Excellence (Ace Ii Project) Project

88. The UNFPA Funded Programme  Un utilized funds UGX 9,405,000 Components Of Reproductive  Differences in amount in the FACE and the Independent Health, Population & Partner’s (IP) cash book UGX1,201,722 Development, And Gender  OFA balance does not agree to the reported cash book Implemented By Ministry Of balance UGX 2,474,920 Education And Sports (UNFPA-  Lack of procedures for verification of assets MoES)  Late payment of PAYE and NSSF  Delay in submission of FACE forms 89. ADB V Support to Higher  Unauthorized expenditure UGX. 20,075,756,670.25 (36.3%). Education, Science  Funds not accounted for by Project Beneficiary Institutions- &Tecchhnology-1273 UGX. 1,331,111,563  Low disbursement of project funds  Lack of policy on development of E-Content-  Lack of e-learning facilities, maintenance and usage plans and policies  Un-deducted Withholding Tax-UGX USD. 657,578.14 (UGX.2, 450,004,629.17)  Un-Implemented Procurements 90. Uganda Teacher and School  Budget Shortfall UGX. 23,778,128,306 (20%) Effectiveness Project-1296 IDA  Under absorption of funds UGX. 29,304,223,100 (USD.8,031,294) (25%).

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91. Skills Development Project-  Budget shortfall UGX.73.431 billion (88.5%). 1338-IDA-MOES Component  Non quantification of activities in the project work plan  Under absorption of funds USD.1, 516,701.86 (26.5%)  Awarding of Local Contracts In Foreign Currency  Delayed procurement of Twinning institutions 92. Skills Development Project-1338-  Non-implementation of planned activities worth USD.3, IDA- PSFU Component 034,136(45%).  Under absorption of project funds USD. 5,008,842 (23%) 93. Gulu University  Unimplemented budget activities  Un disclosed Domestic Arrears UGX.5,216,963,475  Teaching of Un-reviewed programs  Un-Collected premium and ground rent  Irregular Occupation of Premises-  Statutory Deductions-PAYE of UGX.324,624,045 not remitted  Undeveloped Land  Inadequate University Infrastructure  Loss of cash in transit- UGX.48, 527,800  Staffing Gaps  Inadequate budget allocation to the Library

94. Uganda Petroleum Institute  Revenue shortfall UGX. 950,000,000 (10.6%). Kigumba  Under absorption of funds UGX. 2,152,057,819 (24%).  Lack of Practical Equipment for Upstream Operations Diploma Programme  Failure to meet Set Targets of the Strategic Plan  Inadequate Funding for the Library Function -1.3% 95. Albertine Region Sustainable  Un-vouched Expenditure UGX.1,876,679, 037 Development Project-1310  Low absorption of Project Funds  Delayed Implementation of the Project  Staffing gap in the Project coordinating unit  Variance between Procurements estimates and contract prices  Procurement for consultancy for international twinning of Uganda Petroleum Institute at Kigumba (UPIK  Procurement of Consultancy Services for an International Twinning of Kichwamba Technical College-

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GENDER AND SOCIAL  DEVELOPMENT SECTOR 96. Ministry of Gender, Labour and  YLP Low recovery rate 26%(KAM) Social Development  Domestic Arrears/Accumulated 7,136,094,043  Performance of UWEP/recovery rate at 68%  Anomalies in rent for premises /UGX.129,743,733 accumulated interest on arrears 97. Expanding Social Protection  Untimely reconciliation of the Post Bank Uganda General Account  Advances carried forward from ESP I and late accountability of staff, fuel and district advances  Late remittance of PAYE and NSSF during the period under review  Untimely reconciliation of the transaction listings as per the programme accounting system maintained in Uganda and the one maintained in London  Beneficiary complaints (wrong payment amounts, incomplete enrolment, biometric failure) PUBLIC ADMINISTRATION SECTOR

98. Ministry of Foreign Affairs  Budget Performance(Budget not aligned with public investment plans  Domestic Arrears /Accumulated payables UGX.67,230,639,091  Staffing Gaps/80 posts (19%) vacant 99. Ministry of East African  Budget Performance /unspent balance of Community Affairs (MEACA) UGX.11,686,067,547  Domestic arrears/Accumulated UGX.40, 456,672,649  Understaffing/34(33%) vacant 100. Bujumbura  Non Recovery of Advance Payment Security (UGX.1, 070,244.7257)  Non submission of Progress Reports  Inadequate Control of Staff Accommodation 101. Pretoria  Unauthorized over expenditure (UGX 139,382,799)

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102. London  Unauthorized excess expenditure- UGX.155,185,317  Review of Implementation of Mission Chatter (OM) shortfall in expected lobby revenue short fall of US$27M  Outstanding Rent on Commercial Property (OM) £59,117.50  Inspection of Chancery 103. Ottawa  Unauthorized excess Expenditure -UGX 150,727,699  Rental Expenditure -UGX.538,366,001  Review of Implementation of Mission Chatter 104. Washington  Strategic Planning and Mission charter (draft strategic plan)  Performance measurement  Non-Accreditation  Staffing gaps  Medical Insurance 105. New York  Unauthorized Excess Expenditure UGX.0.571bn  Strategic Planning and Mission Charter – Mission uses a Mission Charter which is not approved  Utility and Cleaning Charges – actual expenditure incurred for those services far exceeds the expected proceeds 106. Berlin  Foreign Exchange Loss (EOM)( UGX.736, 579,803)  Unauthorized Excess Expenditure (UGX 13, 978,967 107. Mombasa Nil 108. Kigali  Un-authorized Expenditure / UGX.359,481,704  Accumulation of Domestic Arrears / UGX.391, 582,778 109. Mogadishu  Missing performance Assessment 110. Kinshasa  Failure to dispose of Public Assets 111. Juba  Nil 112. Tripoli  Non submission of Budget Performance Reports  Unauthorized utilization of NTR at source (UGX.11, 769,501)  Failure to submit a procurement plan to PPDA 113. Geneva  Lack of a Strategic plan  Unbudgeted for NTR 114. Rome/FAO  Outstanding Court cases  Failure to prepare a procurement plan  Non-submission of Quarterly Procurement Reports to PPDA

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 Un banked NTR  Non budgeting for NTR  Lack of a Strategic plan  Status of the Official Residence 115. Cairo  Renting of property  The Mission charter and performance reporting  Irregular payment of Education Allowance  Un translated Documents  Condition of the official residence and the chancery 116. Moscow  Renting of Property  The Mission Charter and Performance Reporting.  Un translated Documents 117. Brussels  Empty plot  Refund of Medical Expenses  Assets Management (Lack of Maintenance of the Chancery) 118. Abuja  Engraving of Mission Property  Refund of Medical Expenses  Lack of Board of Survey Report  Proposed Construction of Chancery Building on Plot 311 Cadastral Street 119. Kuala Lumpur  Unsupported medical refunds UGX. 48,293,717  Unapproved mission charter  Non preparation and submission of procurement quarterly reports 120. Canberra  Grounded Vehicle  Unapproved Mission Charter  Non-appraisal of staff  Inadequate Functioning of the PDU 121. Beijing  Draft Strategic plan and mission charter  Cash Management (UGX.1,100,732,688 paid in cash)

122. Guangzhou  Excess Expenditure UGX.0.345bn  Unapproved (draft) Strategic Plan for the Mission 123. Copenhagen  Unauthorized Expenditure UGX.0.094 bn  Unspent Funds Not Returned To UCF UGX.0.202 bn

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 Lack of a Mission Charter 124. Abu Dhabi  Absence of an approved strategic plan and inconsistence strategic objectives  Changes in operation environment for the embassy  Failure to set up consulate in Dubai  Diplomatic anomaly-arrival of an incoming ambassador before the outgoing departs station 125. Dar es salaam  Absence of an approved strategic plan and inconsistence strategic objectives HEALTH SECTOR 126. The UNFPA Funded Programme  Insufficient Supporting Documentation UGX.12,254,974 Ref Dcg.214/314/01  Non deduction of With Holding Tax (WHT) UGX.3,920,700 Implemented By The Ministry Of Health

127. Uganda Blood Transfusion  Unspent balances/Budget shortfall of UGX.568,859,995 Services  Un documented procurements under the regional blood banks UGX.2,031,530,472 128. Fort Portal Regional Referral  Unimplemented budget activities Hospital  Inadequate controls surrounding management of Domestic arrears- UGX 362,688,782

 Under Budgeting for Domestic Arrears

 Unspent Balances

 Unauthorized Excess Expenditure

 Non Delivery of Ambulance Equipment

 Lack of Skilled Staff to handle Medical Equipment

 Inadequate Medical Equipment

 Condition of Medical Equipment

 Hospital Governing Board not fully constituted

129. Hoima Regional Referral Hospital  Domestic Arrears  Inadequate medical equipment

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 Expired Drugs  Ineligible occupants in staff houses  Un-habitable houses  Irregularities in Prior year force account works  Collection of NTR on collection bank accounts  Utilisation of revenue at source  Staffing gaps

130. Jinja Regional Referral Hospital  Under Absorption of Funds

 Outstanding Receivables - UGX 109,663,453

 Outstanding Payables - UGX 579,256,500

 Understaffing

 Lack of Land titles

 Inadequate medical equipment

 Lack of Skilled Personnel to Manage Medical Equipment

 Poor Condition of Medical Equipment

131. Moroto Regional Referral Hospital  Un spent balances

 Lack of key staff in the hospital

 Shortage of Medical equipment

132. Soroti Regional Referral Hospital  Revenue Shortfall

 Budget Under Absorption

 Unapproved Supplementary Funding

 Un accounted for Funds

 Under staffing

 Unsupported Domestic Arrears

 Lack of a Hospital Board

 Management of the of Oxygen Plant and supply of oxygen

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 Shortage of medical equipment at the health facility

 Utilization of Medical Equipment

 Failure to supply ordered Medicines

 Expired Drugs

 Drug Stock Outs

 Unapproved Variation

133. Mbarara Regional Referal  Domestic Arrears UGX.1,925,001,338 Hospital  Unauthorized Utilization of Non-Tax Revenue (NTR)  Understaffing in the Hospital  Expired Drugs  medical equipment is obsolete, faulty (Condition of medical equipment ) 134. Arua Regional Referral Hospital  Non-Tax Revenue Under Collection (NTR) - UGX. 16,580,982  Understaffing at the Hospital  Outdated Staff Establishment Structure  Grounded Motor Vehicles  Lack of a Technical Person on the Evaluation Committee (Irregularities in supply of station wagon)  Irregular award of Contract (Irregularities in supply of station wagon)  Irregular Composition of the Evaluation Committee (Irregularities in the Contract for Construction of a Seven Storey Staff House)  Irregular Contingencies in the Contract Sum (Irregularities in the Contract for Construction of a Seven Storey Staff House )  Irregular Arithmetic Correction of the BoQS (Irregularities in the Contract for Construction of a Seven Storey Staff House)  Irregular Award of a Contract for Consultancy in Supervision

 Expired Period of the Hospital Board  Non-functional Medical Equipment 135. Kabale Regional Referral Hospital  Implementation of Budget as approved by Parliament

177

 Understaffing

 Status of Medical Equipment at the Hospital (non- existent, obsolete, faulty

136. Masaka Regional Referral  Budget shortfall - UGX.163,626,271 Hosiptal  Unimplemented budget activities

 Domestic arrears - UGX.148,981,874

 Poor Condition of Medical Equipment

137. KAYUP project  Unspent balances/Budget shortfall of USD 72,500 138. Ministry of Health-US Centers for  Revenue shortfall of USD 1,446,691.39 Disease Control and Prevention  Unspent balances/Budget shortfall of USD 205,138.6 HIV-AIDS (CDC)  139. Support to the Development of a  Non-Disclosure of Government of Uganda Co-funding in the specialized Maternal and project financial statements UGX 2,284,980,198 Neonatal Health Care Unit in  Mulago National Referral Hospital (Mulago III) project 140. Butabik a Mental National referral  Under collection of NTR (AIA) (UGX.381,300,537) hospital  Unspent releases (UGX.482,532,497)  Irregular Procurement of the Supervision team for Construction works  Protocol for approval of variations not followed  Absence of measurement sheets for certified works  Release of retention monies before issuance of a certificate of substantial completion (UGX 100,358,206)  Quality of construction works not tested  Use of different rates for similar items in variations  Omission of as-built drawings in the contract  Liquidated damages of UGX 87,683,718 not charged  Overpayment of UGX 81,267,400 due to discrepancies in certified quantities measured 141. Uganda Reproductive Maternal  Low disbursement (72%) and utilization (23%) of project funds and Clinical Health Services  Failure to constitute a delegated contracts committee

178

Improvement Project (URMCHSIP) 142. East African Public Health  Unspent balances UGX. USD.1,843,037 Laboratory Networking Project  Decline in project performance: 3 out of 6 project outcome (EAPHLNP II) indicators were achieved. 143. Mulago National Referral Hospital  Unspent releases (UGX.3,502,000,000)  Absence of an approved strategic plan  Delays in Banking of Collections  Lack of Hospital Management Board  Staffing gaps  Use of Inappropriate procurement method  Procurement and execution of works worth (UGX 709,716,746) before Solicitor General’s clearance  Failure to obtain a performance security 144. China - Uganda Friendship  Accumulation of utility arrears (UGX.344,755,371) Hospital  Lack of a housing policy  Failure to sign evaluation reports by some evaluation committee members  Failure to state the date of expiry of bid validity in the bidding document 145. Karamoja Region Staff Housing  Borrowed Funds from Ministry of Health Euros 22,302,24 (KRSHP) project 146. Uganda Sanitation Fund (USF)  Under absorption of funds USD 91,235 project 147. Uganda Reproductive Health  Delays in paying the Independent Verification Agent (IVEA) and Voucher Project (URHVP) the Voucher Management Agent (VMA)  Delays in processing and reimbursement of claims by the VMA 148. SUDS Project  No Issue 149. MKCCAP project- (improvement  Diversion of Funds UGX. 531,276,815 of service delivery at Mulango  Non payment of 6% Withholding Tax UGX. 22,785,876 Hosiptal and the City of Kampala  Failure to implement supervision mission’s recommendations ACCOUNTABILITY SECTOR 150. Ministry of Finance, Planning and  Under collection of revenue UGX.9.969bn. Economic Development

179

 Under absorption of funds meant for Construction of a new office block and staff parking UGX.6.962bn  Underfunding of subventions UGX.12.1Bn  Domestic arrears of UGX.193.113bn  Irregularities in the implementation of the USD.5 Cents/KWH Subsidy for the textile industry  Failure by GoU to meet contractual obligations with an Edible Oil refinery  Failure to recruit staff for the PPP Unit (Public-Private Partnerships Unit)  Escalating outstanding payables UGX. UGX.6,431,654,000 (Privatisation And Utility Sector Reform Project (Operations Account)  Long outstanding receivables UGX.127 billion (Privatisation And Utility Sector Reform Project (Divestiture And Redundancy Account)  Unapproved withdrawals from the Divestiture account UGX.70.434bn  Failure to Prepare and submit Annual reports to Parliament  Non preparation of financial statements (Tax Appeals Tribunal )  Irregular grant of Licenses (National Lotteries And Gamings Regulatory Board)  In adequate evidence on the Collection of Statutory Income UGX.503.865bn by the Board  Failure by the Agent to remit agreed on Government Revenues – National Lottery  Staffing Gaps  Un planned procurement (Procurement for consultancy services to develop an online budgeting system and provision of technical support) 151. Directorate of Ethics and Integrity  Under Staffing  Retrospective Approval of Procurements  Unauthorized Appointment of Local Contract Staff

180

ICT SECTOR 

152. Ministry Of Science, Technology  Budget shortfall UGX.4.034bn And Innovation  Understaffing  Lack of Contract Management Plans  Lack of Strategic Plan  Absence of an Audit Committee  Under releases of UGX.2.048bn  Un spent expenditure balances UGX.3,250bn  Failure to Return Unspent Balances UGX.1.303bn  Expired Term of the Board and Management Committee  Lack of Internal Audit Function  Lack of Land Titles for PIBID Land  Incomplete Works (Audit Inspection of TBI Factory)  Redundant Machinery (Audit Inspection of TBI Factory) 153. Ministry Of Information  Budget shortfall UGX.4,641bn Communication Technology And  Under absorption of the funds UGX.2.99 bn National Guidance  Outstanding domestic Arrears UGX.0.216bn  Unjustified Direct Procurements - UGX.0.457bn  Irregular Issuance of Framework Contract for Supply of IT Equipment - UGX.0.574 bn WORKS SECTOR

154. Ministry of Works and Transport  Unimplemented Activities  Unapproved Strategic Plan  Shortfall of UGX. 159.68 bn (68%) from external funders  Outstanding Domestic Arrears UGX. 63,454,041,199  Payment of unappropriated Domestic Arrears UGX. 10,530,170,770  Mischarge of expenditure UGX. 937,469,458  Unreported Payables of UGX. 4,146,803,220  Nugatory Expenditure UGX. 252,154,884  Lack of Academy Certification for East African Civil Aviation Authority

181

 Lack of an approved legal framework for surviving institutions of the former East African Communities  Expiry of the Standard Gauge Railway Board  Low budget allocation for the estimated 1,833 Project Affected Persons (PAPs) at estimated cost of UGX. 87. bn for development of New Kampala Port at Bukasa.  Unplanned procurements worth UGX. 9,611,407,814  Failure to appoint Contract Managers  Failure to prepare Contract Implementation Plans

182

ANNEXURE III: SUMMARY FINDINGS OF COSASE 3.1 Unqualified Opinions S/N ENTITY KEY AUDIT MATTERS / EMPHASIS OF MATTER / OTHER MATTERS / COMPLIANCE MATTERS

EDUCATION SECTOR 1. Education Service Commission  Undisclosed Domestic Arrears UGX.154,370,506  Weaknesses In Recruitment of Teachers  Failure to Review the Terms and Conditions of Services and Implementation of the Scheme of Services 2. National Council of Sports  Underperformance of the Capital Budget- UGX. 432,858,565 (NCS) (89%)  Poor state of stadiums around the country  Irregular management of consultancy Services For Securing The NCS land titles  Lack of policy on grants to National sports associations 3. National Curriculum  Budget shortfall of UGX.167,658,947 (2.4%). Development Centre  Accumulation of domestic arrears amounting to UGX.322,018,763  Payment for unbudgeted domestic arrears amounting to UGX.59,339,749  Inadequate Transport Equipment to handle entity operations  Delayed Enactment of the Teacher Education Policy 4. Higher Education Students  Budget shortfall of UGX.824,063,350 Financing Board  Under absorption of received funds amounting UGX. UGX.1,588,184,112 (7%).  Under remittance of fees to Universities by UGX.2,536,478,640.  Inadequate loan recovery measures  Low levels of Student Financing, only 5247 (36%) out of 14507 qualifying students financed.  Understaffing, 15 (42%) positions vacant. 5. National Council for Higher  Non implementation of planned activities due to Revenue Education shortfall of UGX. UGX.1,280,578,101 (15.4%).  Excess expenditure amounting UGX.662,046,582

183

6. Economic Policy Research  Noncompliance with the PPDA Act and Regulations Centre (EPRC) 7. Management Training and  Non implementation of planned activities due to budget Advisory Centre (MTAC) shortfall of UGX.300,094,000 (9%)  Accumulation of domestic arrears amounting to UGX. 705,406,000 as at 30th June 2018  Long outstanding receivables amounting UGX.394,030,001  Lack of a governing council 8. Uganda National Examinations  Non implementation of planned activities due to Revenue Board shortfall of UGX.6,616,671,878 (7.7%).  Under absorption of received funds amounting UGX. 6,518,012,800 (8.3%). ENERGY SECTOR 9. Atomic Energy Council  Budget shortfall UGX 1,988,347,430  Unspent Funds UGX 1,069,996,467  Facilities operating with unlicensed machines - 142 (34%) out of 417  Absence of Proper Protective Equipment 10. Electricity Regulatory  Nugatory Expenditure UGX 108,389,948 Authority  Underperformance in prepayment Meter conversion targets of UMEME  Absence of a methodology for verifying costs  High energy losses in the service territories  Non-compliances to Quality of Standards by UMEME 11. Hoima-Kinyara-Kafu  Un Spent Funds UGX.6,470,392,681 Transmission Line Project  Outstanding compensations to Project Affected Persons (PAPs) 12. Hoima-Nkenda Transmission  Long outstanding receivable UGX.140,272,966 Line Project  Unspent Funds UGX.10,479,624,571  Costs resulting from delay to handover site to KEC  Delays in Land Titling 13. Mbarara-Nkenda And Tororo-  Interest claims and additional Costs on late invoice Lira Transmission Lines payments UGX.5,076,700,788 Project  Delayed implementation of contracts

184

 Supervising consultant cost escalations UGX.3,019,220,561  Cancellation of loan by ADB  Delays in land transfer and titling process  Outstanding compensations to Project Affected Persons (PAPs) - 5,899 PAPs out of 6,509 compensated 14. Interconnection Of Electrical  Under Absorption of Funds USD.2,029,494 Grids Of Nile Equatorial Lakes  Receivables /Advance payments USD.486,440 Countries (NELSAP) Uganda  Delayed implementation of contracts Part 15. Kilembe Mines Limited  Outstanding Receivables UGX.1,333,353,917  Non-Revaluation of Handed Back Assets worth UGX.23,252,471,833  Unapproved Excess Expenditure UGX.408,814,486  Non Compliance With Handover Procedures 16. Petroleum Authority Of  Budget Shortfall UGX.997,340,382 Uganda  Inconsistency in Presentation of Statements of Expenditure by Licensees  Low levels of employment of Ugandans by Licensees 17. Rural Electrification Agency  Budget Shortfall UGX.35,914,900,941  Revenue Arrears UGX.10,358,804,214  Escalating Receivables from the Uganda Electricity Transmission Company Limited 5% Levy by 44% from UGX.50,645,352,876 to UGX.73,003,978,668.  Failure to recover funds from Ferdsult Engineering UGX.3,405,000,000  Unpaid energy bills to Uganda Electricity Transmission Company Limited by the Service providers UGX.558,851,527  Failure to achieve annual connection targets  Delayed Implementation of Mini-Grid projects  Unapproved investments in the network by the service providers UGX 1,860,366,806  High rate of energy losses in the service territories  Failure to set up a framework contract system for repairs and maintenance

185

 High initial operational costs for areas taken over from Ferdsult Engineering 18. ERT REA  Under-absorption of funds amounting UGX.12,445,086,358 (USD.3,378,759.30) representing an absorption rate of 18.9%.  Delayed commencement of Fast track lines.  Need to fast track preparations for grid intensification schemes 19. Uganda Electricity Generation  Unbilled revenues from the Concession and Assignment Company Limited Agreement  Cracks at Nalubaale Power Station  Delayed implementation of projects  Delays in Commissioning Hydro Power Plants (HPP)  Non- adherence to standards 20. Uganda National Oil Company  Lack of Title and Valuation for Assets transferred to the (UNOC) Company  Delayed UNOC Back-in for state participation as required by Petroleum Sharing Agreements ( PSAs)  Management of Jinja Storage Tanks (Shortfall in minimum monthly throughput and stock requirements) 21. Uganda Electricity  Avoidable costs incurred - surcharges for delayed payments Transmission Company Ltd to Bujagali Energy Limited (BEL) amounting (UETCL) UGX.391,752,610  Loss arising out of weaknesses in asset management – Vandalism of equipment worth UGX1,980,454,206.  Deemed energy purchases amounting to UGX.5,818,990,000  Increase of 38.7bn (79%) in impairment and provisions for doubtful debts to UGX 87.9bn in FY2017/18.  Wayleaves included in Capital Work in Progress 22. Electricity Sector Development  No issue of high significance (ESDP - UETCL Kawanda Masaka) 23. ERT (BOU)  No issue of high significance

186

24. Uganda Electricity Credit  No issue of high significance Capitalization Company Ltd (UECCCL) 25. ERT (UECCCL)  No issue of high significance 26. Uganda Rural Electricity  Delayed Completion of Projects Access Project (UREAP) WATER AND ENVIRONMENT SECTOR 27. National Environment  Budget shortfall of UGX 2,364,386,000 i.e 10% shortfall Management Authority  Outstanding Receivables as at 30.6.2018 worth UGX (NEMA) 15,307,218,000  Environment Levy/ Surcharge on used imports not remitted to NEF worth UGX 750.57billion  Inadequate funding to Local Governments for environmental management  Weaknesses in implementation of guidelines for sustainable use of disaster prone areas  Non-compliance with the Industrial waste disposal conditions  Inadequate management of health care waste 28. National Forestry Authority  Budget shortfall of UGX.9, 495,799,333 (34%) (NFA)  Authority’s domestic arrears increased from UGX 8,600,817,000 in the prior year to UGX 10,446,677,000, an increase of UGX 1,845,860,000 (21%)  Loss of land in Buhungiro Central Forest Reserve in Kyegegwa District  Encroachment on Namanve Central Forest Reserve  Lack of a training policy  Unlicensed activities in forest reserves 29. Uganda National  Budget Shortfall of UGX.2,867,081,172 (10.5%). Meteorological Authority  Lack of notice for occupation of land at various weather (UNMA) stations  Non-functional weather stations  Lack of a Board of Directors

187

30. National Water & Sewerage  Failure to revalue Property, Plant and Equipment Corporation  Absence of land titles for assets taken over  Absence of abstraction and waste discharge permits 31. Kampala Sanitation Program  Delay to pay contractors by GoU to the tune of (KSP) - National Water UGX.31,158,540,457  Impending Legal Suits on Disputed Compensation Offers/claims i.e Amount Claimed is UGX 1,395,856,789 but Compensated amount is UGX 115,616,970 32. Protection of Lake Victoria  No issue of high significance Kampala Sanitation Programme (WATSAN) 33. Water Management &  No issue of high significance Development Project (WMDP) - NWSC PUBLIC ADMINISTRATION SECTOR 34. Electoral Commission (EC)  Budget Performance (UGX.180,366,759 (0.19%) Shortfall  Failure to Collect NTR  Non-deduction of withholding tax from Rental Expenses  Funds not accounted for UGX.286,780,725  Outstanding advances amounting UGX.41,950,000

GENDER AND SOCIAL DEVELOPMENT SECTOR 35. National Council for Disability  Budget Performance/Budget Shortfall of 80%  Understaffing - 4 positions (33%) vacant

 Failure to hold AGM

36. National Library of Uganda  Shortfall in NTR Collections UGX.12,918,000 (40%)  Outstanding NSSF Contribution arrears UGX.373,510,209  Expired Tenancy Agreement  Forfeiture of Land 37. National Women’s Council  Budget Performance /only UGX 673,848,470 (76%)  Staffing Gaps / 2 vacant positions 38. Equal Opportunities  Outstanding Receivables UGX.211,105,359 Commission  Staffing Gaps / 35 positions vacant 44%

188

39. National Youth Council  Budget Performance (Revenue Shortfall UGX.290, 532,622 (27%).

 Non remittance Of statutory Deductions (UGX.65,800,617)  Staffing Gaps / 5 positions vacant 36% 40. Uganda National Cultural  Payables Management (Accumulated UGX.1, 940,349,139) Centre  Accumulated Receivables UGX.2,071,691,350  Doubtful refund of Salary UGX.50,000,000  Staffing Gaps 19 (33%) posts vacant  Expiry of Board Tenure 41. Uganda National Children’s  Budget Performance budget shortfall of UGX.33,802,480 Authority (3%).  Lack of a Governing Board  Unapproved Budget  Temporary Appointments 42. National Social Security Fund  Unallocated Members’ Funds amounting Ushs 49.5 billion (NSSF)  Disclosed Contingent liability of UGX.42.2bn in tax to URA ACCOUNTABILITY SECTOR 43. Bank of Uganda  Impairment of amount due from Crane Bank Limited (in receivership) - UGX 235,922  Impairment of Bank of Uganda’s capital 44. Capital Markets Authority  No issue of high significance 45. Deposit Protection Fund - BoU  No issue of high significance 46. Financial Intelligence Authority  Domestic Arrears - UGX.215,837,175  Understaffing - 39 posts filled out of 64  Uncompetitive procurement of air tickets worth - UGX.162,261,990 47. Insurance Regulatory  Unimplemented activities - contracts valued at Authority UGX.83,397,132 and the setting up of Insurance Appeals Tribunal  Outstanding Receivables - 64,957,554  Delays in Construction of Insurance Regulatory Authority Office Building  Incomplete Procurements valued at UGX.210,684,500 48. National Population Council  Staffing Gap – 49 filled out of 84

189

49. PPDA Appeals Tribunal  Unutilized funds - UGX.166,049,143  Lack of clear performance targets  Manual Financial management system in use 50. Privatization & Utility Sector  Long outstanding receivables - UGX.80.9 billion Reform Project (Divestiture &  Unauthorized withdrawals from the Divestiture account - Redundancy Accounts) UGX.69,706,812,638 51. Public Procurement and  Budget shortfall of UGX.199,735,018 Disposal of Public Assets  Outstanding Payables - UGX.97,765,859 Authority  Under Staffing– 101 filled out of 132 52. Uganda Bureau of Statistics  Budget Shortfall - UGX.660,203,337 (UBOS)  Under absorption of funds of UGX.619,715,120  Lack of Certificate of Land Title for the Statistics House 53. Uganda Free Zones Authority  Land of land title for land acquired at UGX.7.4 billion  Procurement of air tickets by HR Department instead of PDU  Lack of an Internal Audit function 54. Uganda Retirement Benefits  Staffing Gaps - 30 filled out of 58 Regulatory Authority (URBRA)  Payments on behalf of MoFPED - UGX.401,945,391  Delays in remitting collected revenue to BOU A/C - UGX.489,446,464  Failure to remit unspent balances to the UCF (Expiry of Appropriation) -UGX.577,892,780 55. Uganda Revenue Authority -  Long Outstanding NSSF Arrears - UGX.3,675,217,390 Corporate Services  Excessive Cash withdrawals of UGX.12,985,802,703 in excess of the monthly cash limit of UGX.40,000,000  Failure to advertise a call for bids to provide support and maintenance of Disaster recovery site firewall - UGX.618,866,009  Absence of a Board Charter 56. Uganda Revenue Authority -  Revenue collection shortfall of UGX.606.32 billion Revenue Collection  Uncollectible Cash - UGX.1,031,840,858  Un-receipted collections from BoU - UGX.130 billion  Domestic tax arrears - UGX.2.6 trillion  Un-collected stamp duty from Land transactions - worth UGX.239 billion

190

 Failure to track All High-Risk Goods - UGX.265,972,974,206  Failure to collect identified taxes - UGX.108,079,587,034  Issuance of Tax Clearing Certificates to Taxpayers with Tax arrears - UGX.809,611,255,873 57. Uganda Seeds Company  Current Account with PURSP - UGX.1,106,572,915 Limited  Underutilization of land and other assets  Lack of Board of Directors  Failure to maintain leased Assets (Machinery and Housing Estates) 58. Uganda Property Holdings  Long Overdue Trade Debtors (slow recovery) - reduced from Limited (UPHL) UGX.2,015,270,471 as at 30th June 2017 to UGX.1,890,499,800 as at 30th June 2018  Lack of Certificate of Title for Masese Land 59. Pride microfinance (MDI) –  Impairment of loans and advances to customers 31st December 2017  Information and communication technology changes 60. Post Bank (U) Ltd – 31st  Impairment of loans and advances to customers December 2017 61. Uganda Development Bank  Impairment of Loans and Advances Ltd – 31st December 2017 SCIENCE SECTOR 62. Uganda Industrial Research  Budget shortfall of UGX.98,857,221 Institute  Un-implemented planned activities - UGX.1,651,510,600  Diversion of funds to unplanned activities - UGX.1,067,947,407  Failure to Budget for Domestic Arrears - UGX.831,107,348  Staffing Gaps – 282 filled out of 560  Uncollected Production fees of UGX.78,138,376  Innovation Fund Shortfall - UGX.3,339,800,000  Absence of a Board of Directors INFORMATION AND COMMUNICATION TECHNOLOGY SECTOR 63. Uganda Institute of  Budget shortfall of UGX.1,187,119,185 Communication and  Unspent balance of UGX.516,347,166 Information Technology  Unclear governance structure and legal status of the Institute

191

 Under Staffing – 44 filled out of 107  Irregular Recruitment of Contract Staff  Direct Procurement worth UGX.29,406,600 64. Uganda Posts Limited  Budget shortfall of UGX.2,852,589,691  Purchase of power backup UGX.263,450,880 not budgeted for  Outstanding Trade and other Payables - UGX.13,341,472,070  Unpaid up Share Capital UGX.5,512,825,000 for 220,513 shares  Overdue Receivables - UGX.7,855,540,320  Outstanding Levy on Gross Annual Revenue of UGX.631,517,772  Nugatory Expenditure (fines, court awards and legal fees) of UGX.330, 537,700  Expired Contracts for Members of the UPL Board  Lack of Land Titles for UPL Land - Plot 40 Margarita Road, Kasese; Plot 18-20 Gogonyo Road, Pallisa; Plot 76 Mawokota Block 92, Mpigi; Plot 6-10 Birch Avenue, Masaka; Plot 2-6 Mutekanga Road, Kamuli; Plot 1-11 Nsambya Road, Kampala  High Rate of Staff Turnover – 21 staff left org but were not replaced  Outstanding Tax Payments - UGX.4,317,502,160 (PAYE - UGX.1,035,638,150, VAT - UGX.3,281,864,010)  Non Alignment of Strategic Plan to the National Development Plan 65. NITA - U  Funding gap of UGX.30,542,595,353  Impact of planned transfer of national backbone infrastructure to UTL (in Administration)  Unutilized Bulk Internet Bandwidth  Redundant Network investment  Staffing Gap – 66 filled out of 157  Board not fully constituted

192

66. Uganda Communications  Budget Shortfall - UGX.9,625,228,029 Commission (UCC)  Delayed implementation of activities worth UGX.4,776,155,324  Overdue Trade Receivables - UGX.26,170,253,357  Under remittance of Share of 2% GAR - UGX.1,107,029,960)  Unfair Disqualification of Bidder  Weaknesses in Contract Management  Conflicting sections of the Law in Regard to the Position of the Executive Director also being a Board Member 67. Regional Communications  Funding gap of UGX.11,665,932,201 Infrastructure Program (RCIP)  Unspent balance - USD.9,270,344.82  Inadequacy in staffing - No Project Accountant 68. Rural Communications  Unspent balance - UGX.10,987,226,459 Development Fund (RCDF)  Delays implementation of planned activities worth UGX.9,872,672,792  Unexplained share of the retained balance of Gross Annual Revenue - UGX.25,404,934,506 JUSTICE LAW AND ORDER SECTOR (JLOS) 69. Uganda Registration Services  Unspent Balances UGX. 835,642,612 Bureau - Operations  Domestic Arrears UGX. 1,941,423,697  Irregular payments to Telecommunication Companies UGX.59,071,109  Staffing gaps 55% 70. Uganda Registration Services  Low funds absorption UGX. 942,295,910 Bureau - Liquidation  Failure to implement activities  Delayed recovery of Receivables UGX. 6,252,764,629  Unauthorized Expenditure on Garnishee Absolute UGX. 1,539,042,978 71. Uganda Human Rights  Budget shortfall of UGX. 213,068,051 Commission  Unimplemented Activities  Domestic Arrears UGX. 3,910,443,177  Inadequate management of land assets  3 plots at Buganda road comprise of old dilapidated buildings

193

 Land in Gulu and Masaka remained un-developed  Irregular payments to Telecommunications Companies for providing telephone services and airtime auto load UGX. 77,541,448  Delayed Appointment of the Commissioners and accumulation of case backlog.  Irregular payment of monthly allowances to Staff 3.7Bn 72. Uganda Law Reform  Unimplemented Activities Commission  Domestic Arrears UGX. 9,581,933  Staffing Gaps 22% 73. Judicial Service Commission  Unimplemented Activities  Over paid Monthly pensions UGX. 30,874,922  Low funds absorption/ Unspent Balances UGX. 959,018,284  Case Backlog within the Complaints Management System 74. National Identification and  Mischarges of Expenditure – UGX.1,559,088,886 Registration Authority (NIRA)  Under collection of Non-Tax Revenue - shortfall of UGX.102,138,311,000  Accumulation of contingent liabilities - UGX 1.2 billion  Lack of a fully constituted Board  Staffing Gaps 206 out of 864 positions filled  Absence of approved ICT Continuity plan, Disaster Recovery Plan and Absence of a Disaster Recovery Site 75. Amnesty Commission  Budget shortfall of UGX.167,200,000 (6%).  Partial implementation of planned activities.  Staffing Gaps - 37 vacant positions (49.4%). LEGISLATURE SECTOR 76. Parliamentary Commission  Budget shortfall of UGX. 4,519,137,627 (representing 1% of the approved budget)  Lack of policy guidelines for the motor vehicle scheme for members of parliament  Mischarge of expenditure-UGX.2,348,890,690(representing 0.5% of total expenditure)  Absence of land titles for the Commission for 3 plots (16-18 on Parliament Avenue)

194

 Absence of offsite backup system for Parliament Hansard Audio and Video recordings  Payment to Uganda Police Operations - UGX.2,259,135,000 meant for maintenance of machinery and equipment but used for maintenance and servicing of security equipment at Parliament PUBLIC SECTOR MANAGEMENT SECTOR 77. Local Government Finance  Some activities were not implemented despite receiving Commission 100% of budgeted finds  Inadequate storage facilities  Advance payment of contract gratuity-UGX. 98,340,191  Support to LGs to establish Local revenue databases- only 89 Votes of the 168 votes (Districts and Urban Councils) have established local revenue databases thus representing 52% coverage.  Inactive disposal plan  Change of special conditions of the bid document in the contract agreement 78. National Planning Authority  Some activities were not implemented despite receiving 100% of budgeted finds  Inadequate controls surrounding management of domestic arrears-arrears incurred outside the approved estimates appropriated by Parliament(UGX. 812,874,533)  Delay in undertaking the Midterm review of NDP II  Delayed issuance of planning circular for NDP-III  Delayed Submission/non-preparation of Sector development Plans  Lack of clear Service Delivery Standards for various sectors  Sensitization of MDAs and LGs on the Certificate of compliance (CoC)-Lack of feedback and follow up mechanism  Lack of guidelines to support the implementation of NPA regulations  Lack of key risk management parameters to enable effective evaluation of budget compliance in MDAs/LGs

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 Board not fully constituted 79. Kampala Capital City Authority  Budget shortfall of UGX.44,237,573,141 (approximately15%).  Non-implementation of planned activities  Accumulation of Domestic arrears to UGX.43,880,243,429 as at 30th June 2018.  Non-remittance of PAYE of UGX.20,745,588,266 and VAT of UGX.676,696,602  Outstanding trade and other receivables amounting to UGX. UGX.44,095,770,425  Legal costs paid - UGX19,445,101,578 and UGX.5,032,868,969 provision for legal costs for the period under review  UGX.433.8 million receivable from Multiplex as at 30th June 2018 and non-compliance of the contractor to contract terms  Nugatory expenditure in the form of Interest on Delayed Payments-UGX. 714,318,282  Unapproved Human Resource Manual  Staffing gaps (out of 1464 positions required, only 1128 positions are filled resulting into a shortfall of 336 positions (representing 23%).  Certificate of compliance (CoC) by NPA – achievement of NDP II.  Issues from Field inspections 80. Kampala Feacal Sludge  Under absorption of funds - only US$.677,494 spent out of Management Project (31st US$.1,043,548 available representing an absorption capacity December 2017) of 43.7%.  Inadequate Monitoring of waste management activities 81. Kampala – Kigali Capital Cities  Delays in the implementation of activities against the Logical Health Project (KCCHP) FK framework. NORWAY (11 months period ended 31st August 2017)

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82. Kampala Institutional And  Under-absorption of available funds (only Infrastructure Development UGX.68,788,030,111 spent out of UGX.174,084,665,219 Project Phase 2 (KIIDP 2) representing budget absorption of 45%.  Non-implementation of planned activities  Contingent liability due to delay in site handover- UGX,6,630,071,834  Garnishee order on KIIDP2 Account - US$. 3,942,647.4  Overall Performance as per the logical framework - delays in the implementation of a number of activities 83. Public Service Commission  Non-implementation of planned activities  Accumulation of domestic arrears amounting to UGX.245,367,756 84. Parliamentary Pension Scheme  Expired trustee’s licenses  Failure by fund managers to provide complete and consolidated reports 85. New Vision Printing And  Receivables worth UGX.16.3 bn Publishing Company Limited  Manual computation of commissions. 86. Uganda Printing and  Long Outstanding trade debtors UGX.2,199,595,369 Publishing Corporation  Trade and other payables UGX.5,684,420,860  Failure to fulfil the objectives of the corporation  Failure to prepare management reports SECURITY SECTOR 87. NEC Head Quarter  Unspent Balance UGX.1,543,295,040  Over- due Creditors - UGX.65,292,458  Long outstanding Debtors UGX.260,379,800  Stale Investments - UGX.2,710,326,736  Undeveloped Plot in Namanve Industrial Park  Absence of an Audit Committee 88. NEC Farm Katonga  Budget shortfall of UGX.12,241,202,295  Outstanding trade creditors UGX.1.908,000  Failure to realise project objectives and loss of funds UGX.1,409,450,000  Un-surveyed Land/untitled land blocks 274,378 and 386  Un installed weighing scale

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89. NEC Tractor Project  Budget short fall of UGX.1,491,639,506  Outstanding Trade Debtors UGX.1,155,499,320  Unprofitable business operations - loss of UGX.60,721,203  Nugatory Expenditure UGX.21,761,163 90. NEC Tractor Hire  Unimplemented Activities  Failure to achieve the intended project objectives 91. NEC Works  Budget shortfall of UGX.2,635,612,812  Unimplemented Activities  Un-utilised equipment 92. NEC UZIMA  Budget shortfall of UGX.2,779,585,000  Unimplemented Activities  Unprofitable trading -loss of UGX.385,744,000  Incomplete water production records 93. NEC Luwero industries  Unimplemented Activities  Outstanding Trade Debtors UGX.410,966,171  Failure to dispose-off old assets  Appointment of employees without Terms of service  Irregular secondment of UPDF Personnel  Irregular Medical Insurance Scheme – UGX.77,792,185 94. Uganda Veterans Assistance  Duplication of activities Board  Repair of Personal vehicles using UVAB Funds  Failure to implement the mandate of Uganda Veterans Assistance Board 95. Uganda Air Cargo  Long outstanding trade creditors worth UGX.13,512,333,853  Salaries payable amounting to UGX.3,509,535,137  Increased in Trade debtors from UGX.12,140,152,344 as at 30th June 2017 to UGX.16,524,194,436 as at 30th June 2018  Lack of Capital for Capitalisation  Grounded C130 Aircraft AGRICULTURE SECTOR 96. Uganda Coffee Development  Unspent balances of UGX.1.6 billion Authority  Unimplemented budget activities  Inadequate Controls Surrounding Management of Domestic Arrears - UGX.106,099,093,573

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 Failure to budget for domestic arrears  Low survival rates of the seedlings planted  Inadequate coffee extension workers  Distribution of seedlings not based on demand  Lack of a farmers’ register  Unfunded priorities  Non-compliance with the revenue collection process for NTR 97. National Agricultural Research  Budget shortfall of UGX.2,038,103,779 Organization - NARO  Unimplemented budget activities  Inadequate Controls Surrounding Management of Domestic Arrears - UGX.630,364,872  Failure to budget for domestic arrears  Lack of land titles leading to encroachment  Lack of a researchers register  Non-compliance with the Non tax Revenue collection process  Failure to operationalize the Agricultural Research Trust fund  Failure to obtain Intellectual Property Rights (IPR)  Staffing Gaps 881 out of 994 positions filled 98. Agricultural Technology And  Non-implementation of some of the planned activities. Agribusiness Advisory Services  Competitive Grant Scheme (CGS) Funds Project – NARO Component  Failure to achieve CGS Project objectives  Inadequate financial reporting of CGS projects  Non-execution of performance security and undated Contracts  Delayed completion of Milking Parlor at Nakyesasa  Kiige Satellite station-Incomplete Renovation of two (2) staff houses 99. National Animal Genetics  Budget shortfall of UGX.2,910,000,000 Centre and Data Bank  Unimplemented budget activities  Non-compliance with commitment control procedures- UGX.149,453,000  Unbudgeted for domestic arrears- UGX.302,491,433  Encroachment of ranch Land

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 Loss of Livestock, imported eggs and parent stock  Incomplete construction works in Mazuri Ranch, Njeru Stock Farm, Lusenke Ranch and Nshaara Ranch  Ineligible occupants in staff houses  Un-habitable houses due to fire and lack of roofs  Irregularities in Prior year force account works  Non-compliance with the Non Tax Revenue collection process  Utilisation of revenue at source UGX.68,243,150  Staffing gaps 142 out 313 positions filled 100. Cotton Development  Unspent balances of UGX.0.069 billion Organization  Domestic Arrears UGX.317,468,006  Over stocking of Cotton Lint 101. Dairy Development Authority  Unspent balances of UGX.98,282,172  Unimplemented Activities  Inadequate Controls Surrounding Management of Domestic Arrears - UGX.252,173,569  Failure to budget for domestic arrears  Failure to collect Revenue - UGX. 366,052,835  Untitled land  Non-Operational milk processing factory  Encroachment of school land  Expiry of Performance Security  Failure to collect cess  Staffing Gaps 65 out of 140 positions filled 102. National Agricultural Advisory  Unspent balances of UGX.807,208,268 (0.3%) Services-NAADS  Non-implementation of some of the planned activities  Increase in domestic arrears from UGX.52,024,371,979 in the year 2016/2017 to UGX.57,631,295,228 in the current year.  Payment of un-budgeted prior year arrears amounting to UGX.48,634,712,458  Payment for tea lead agency fees for Kabale and Kisoro districts

200

 Flawed MOU with regard to measurement of deliverables:  Rationale for the 30% Lead agency fee on distributed tea:  Partial consent settlement without Guarantee;  Mischarge of Expenditure totalling to UGX.1,009,498,818  Nugatory Expenditure – UGX 93,159,046  Pending cases whose value was in excess of UGX.18 billion pending resolution by court  Operation Wealth Creation vehicle status review  Basis for computation of transport costs to the tune of UGX.1,978,744,208  Sugarcane Production in Northern Uganda  Cane seed procurement-UGX.4,518,260,220 . Non consideration of the evaluation methodology and criteria . Delayed delivery and Liquidated damages charges . Expiry of the Advance payment guarantee  Bush Clearing, Land preparation, Planting cane, weed management, manual and mechanical weeding, seed cane harvesting and loading-UGX.15,526,487,530 . Irregular Advance payment security in form of Log books- UGX.4,657,946,259 . Contract price adjustment:  NAADS’ restructuring and Legal Mandate  Irregular restructuring:-  Uncertainty on ownership of Assets:-  Liability against OWC:-  NAADS’ assets held by districts  Failure to execute performance security worth UGX.23,325,873,958  Recruitment of Civilians under Operation Wealth Creation  Unclear Authority for the recruitment of civilians  Non deduction of PAYE from OWC civilian staff

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TRADE SECTOR 103. Uganda Development  Uncertainty of viability in investments of; Corporation  Lake Victoria Glass Works Limited UGX.215,219,000,  Atiak Sugar Factory-Horyal Investments Holding Company Ltd (HIHC) UGX.19,811,808,120  Non transfer of shares to Ministry of Science, Technology and Innovations by UDC  Luwero Fruit factory Land not titled and valued  Limited progress on the development of the fruit factory  Delayed commencement of the fruit processing Plant  Investment of funds in Isingiro Fruit Factory without a memorandum of understanding  Failure to takeover Embassy House  Failure to take over Government interest in Munyonyo Commonwealth Resort Limited  Delays in transferring the supervision role of Phenix Logistics (Uganda) Limited to UDC 104. Uganda National Bureau of  Budget shortfall of UGX.1,487,803,407 (7%). Standards  Non-implementation of planned activities  Staffing Gaps - 334 posts vacant representing a 46% vacancy level  Failure to implement entity mandate TOURISM SECTOR 105. Uganda Hotel and Tourism  Inadequate controls surrounding domestic arrears- Training Institute UGX.375,262,369  Long outstanding receivables-UGX.124,268,897  Subvention funding shortfalls-UGX.150,000,000  Lack of a capital budget  Lack of approved strategic plan  Officers in acting capacities beyond the recommended period  Failure to collect training levy  Lack of information Technology Policy  Unsatisfactory attainment of the objectives of the Institute’s establishment

202

 Lack of regulations to operationalize the HTTI Act, 2015 106. Uganda Tourism Board  Unspent balances of UGX.8,588,336,986  Non-implementation of planned activities  Mischarge of Expenditure - UGX.539,557,555  Un-supported travel abroad –UGX. 310,833,763  Lack of policy on selection of entities or programs to support  Lack of Organogram  Lack of Records management Policy  Inadequate Store  Inadequate Licensing regulations 107. Uganda Wildlife Conservation  Stalled Construction of the Floating Restaurant (Pier) & Education Center (UWEC)  Inadequate Maintenance of Accommodation Facilities  Staffing Gaps 39 out of 59 positions filled 108. Nile Hotel International  Non-implementation of planned activities  Lack of Investment guidelines  Lack of mechanism to follow-up revenue collected by the Concessioner  Delayed takeover of Nile Hotel by UDC  Un authorized procurement of a computerized Financial Management Information Systems  Board of Directors Overriding Management Responsibility  Continuous stay of Board of Directors 109. Uganda Wildlife research and  Revenue Shortfall-UGX.363,085,041 training institute  Lack of a capital budget  Lack of direct out let for the institute students  Governance (Academic and Research Board (ARB), no member from the academic Board and failure to meet gender balance requirements)  Lack of regulations to operationalize the UWRTI Act, 2016  Failure to Undertake research 110. Uganda Wildlife Authority  Non-implementation of planned activities despite 159% revenue performance.  Un-accounted for funds - UGX.313,909,855  Non Remittance of Revenue to the District Local Authorities.

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 Advances to Individual Personal Accounts-UGX.675,081,912.  Lack of Certificates of compliance HEALTH SECTOR 111. Uganda Aids Commission  Unspent balances – UGX.116,990,840  Long outstanding domestic arrears – UGX.98,881,576  Uncollected revenue arrears – UGX.74,600,000  Failure to formulate Regulations  Award of Contract in Foreign currency – USD 16,525.66  Direct Procurements – UGX.36,978,521 112. Uganda Heart Institute  Budget shortfall - UGX.346,379,949  Unspent balances - UGX.1,011,533,283  Contracts above estimated prices - UGX.694,476,276 113. National Drugs Authority  Shortfall in Revenue – UGX.2,362,404,483  Planned activities not implemented - UGX 25,996,713,000  Failure to revalue Non-current assets  Long Outstanding receivables - UGX.22,338,224,283  Non-delivery of items paid for during installation of Microbiology Laboratory - USD 42,691  Inadequate staffing at regional offices  Inadequate inspection by NDA Inspectors  30 Pharmacies and drug shops out of 89 operating without a valid certificate of suitability of premises and valid operating license  Non-separation of expired drugs from unexpired ones noted in 31 out of 89 drug shops and pharmacies  Contracts awarded above budgeted provision – UGX.82,222,500  Board not fully constituted 114. National Medical Stores (NMS)  Unsupported CDC project (receivable) - UGX 8,091,650,000  Failure to provide for position of Deputy General Manager  Delay in execution of signed contracts - UGX 185,670,619 115. Uganda Virus Research  Planned activities worth UGX.431,654,959 not implemented Institute  Staff on extended probation periods  Non-replacement of the asbestos sheets

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 Non-submission of final completion certificate for the contract for replacement of asbestos sheets - UGX.137,155,200 116. Uganda Cancer Institute  Unspent balances UGX.1,421,808,924  Under-staffing - 294 approved positions, only 209 posts were filled, leaving 85 (29%) vacancies vacant. 117. Joint Clinical Research Centre  Long outstanding Receivables (UGX 4,689,310,000)  Outstanding PAYE arrears of UGX 1,933,190,000  Absence of an Evaluation Committee  Irregular use of direct procurements 118. Health Service Commission  Unspent balances of UGX.270,768,815  Payables totaling UGX.82,918,252  Advertised positions that did not attract candidates  Staffing gaps  Lack of standing orders for the health service  Use of Non- Prequalified Firms 119. Uganda Medical and Dental  Inconsistencies in the Calculation of Depreciation Practitioner's council  Outdated procedures in the Financial Procedures Manual  Staffing Gaps  Non-deduction of Withholding Tax (UGX 2,430,540) 120. Uganda Allied Health  Revenue shortfalls (UGX.550,112,006) Profession Council  Unauthorized expenditure (UGX. 444,836,577)  Inconsistencies in depreciation rates  Uncompleted works for remodeling and renovation of Allied Health Professionals Council house  Staffing gaps  Failure to gazette recognized training institutions and licensed allied health units WORKS SECTOR 121. Uganda Road Fund  Undisclosed non-produced assets worth UGX.1,510,000,000  Mischarge of expenditure – UGX.418,598,288  Reporting Inconsistencies  Governance Issues  Unsigned board minutes

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 Non consideration of internal audit reports by the board  Unrecovered PAYE amounting to UGX.55,602,000  Emergency road funds  Unverified emergency sites  Inadequate emergency intervention fund  Failure to apply the allocation formula for road maintenance funds 122. Civil Aviation Authority (for  Entebbe International Airport -Expansion Project the year ended 30th June Management 2016)  Inconsistencies in the operationalization of the requirements of the agreements signed  Absence of evidence of involvement of an independent consultant and verification report during the year ended 30 June 2016  Need for a technical and final audit of the project  Management of Trade and Other Payables and Supplier Relationships  Recovery of Receivables from Government Entities  Nakasongola Project Funding-Ugx 23 Billion  Non-existence of recovery plan for Government debts  Compliance with safety regulations requirements - ICAO Safety Report  Corporate Governance (failure to assess likelihood of fraud or its consequences, absence of whistle blowing policy and no fraud Tracker) 123. North Eastern Road-Corridor  Financial statements May not be suitable for another Asset Management Project purpose. (NERAMP)  Maintenance of one bank account denominated in United States Dollars with Bank of Uganda. 124. Busega – Mpigi Road Project  Funds Utilization  Diversion of Project funds – UGX.36,431,557,233  Low disbursement of project funds  Delayed procurement

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125. Road Sector Support Project 4  Compensation to the Project Affected Persons (PAPs) (RSSP4)  Delayed payment to Project Affected Persons (PAPs)  Land Acquisition ( Transfer/ sub-division of land)  Delayed civil works  Lack of evidence on approval of reviewed designs  Inter – Project Re-allocations-UGX. 10,397,460,757  Noncompliance with contractual and statutory requirements (Insurance, Health and safety, NSSF, Laboratory equipment, and contractor mobilization)

3.2 Qualified Opinions

S/N ENTITY BASIS OF OPINION KEY AUDIT MATTERS / EMPHASIS OF MATTER / OTHER MATTERS / COMPLIANCE MATTERS

EDUCATION SECTOR 1. Mandela National  Irregular Disclosure  Accumulation of Payables to UGX. Stadium Limited - of Going Concern 4,152,001,314 as at 30th June 2018. Namboole  Accumulation of Receivables to UGX.1,772,813,135 as at 30th June 2018.  Revenue shortfall of UGX 694,000,000 (15%)  Irregularities in outsourcing of Mandela Sports Hotel  Increased Encroachment on Stadium Land. ENERGY SECTOR 2. Uganda Electricity  Inappropriate  Failure to allot shares for converted Distribution Company assumptions on the loan equity worth Ltd (UEDCL) – 6 month useful life of utility UGX.249,968,844,000 period ended 30th June assets  Outstanding amount from Umeme Ltd 2017 amounting UGX.65 billion

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 Un-recognised revenue from the assets leased to UMEME Ltd by UEDCL  Long outstanding receivables amounting UGX.68 bn from government. ACCOUNTABILITY SECTOR 3. Uganda Investment  Misleading  Budget shortfall of UGX.231,440,372 Authority (UIA) Statements of  Un-implement planned activities Appropriation worth UGX.2,240,725,000  Unauthorized excess expenditure above appropriated amount of UGX.3,821,846,055  Outstanding payables of UGX.2,326,247,505  Diversion of UGX.1,000,000,000 Meant for a Feasibility Study and Project Report for Kampala Industrial and Business Park, Namanve  Failure to Revise the Service Charge from 0.5% and Ground Rent for Leased Land  Cancelled Procurements worth UGX.2,417,186,147  Unplanned Procurements - UGX.412,125,972  Ineligible Revision of Contract Price by more than 15% -UGX.82,826,140  Irregular Contract Amendment for Additional Quantities  Missing personal files for Executive Assistant to the Executive Director, Personal Assistant and Office Assistant SCIENCE SECTOR

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4. Uganda National Council  Unaccounted for  Budget shortfall of of Science and Funds - UGX.6,134,974,000 Technology UGX.179,858,250  Lack of operational guidelines for the Innovation Fund Management  Inspections of Projects  Lack of a fully constituted Governing Council INFORMATION AND COMMUNICATION TECHNOLOGY SECTOR 5. Uganda Broadcasting  Payment for non-  Revenue shortfall of UGX.23.740bn– Corporation (UBC) disclosed payables - received UGX.12.540bn out of the UGX.494,913,134 budget of UGX.36.280bn  Unsupported Trade  Other Payables - UGX.46,332,244,709 Payables -  Trade and other receivables - UGX.3,606,663,131 increased by 92% from UGX.13bn in  Unaccounted for the financial year 2016/17 to Funds UGX UGX.25bn in the FY 2017/2018. 163,252,000  Management of Bank Accounts  Remuneration of the Revamp Committee members  Review of the Revamp Committee outputs  Inconsistency in the tenure of Managing Director  Review of performance of the Board of Directors  Review of Internal Audit performance  Irregular recruitment of staff/Head Hunting  Procurement of Production Cameras and Accessories – UGX.236,921,112  Irregular inclusion of a signatory on a Bank Account JLOS

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6. Law Development  Mischarge of  Budget Shortfall UGX. 1,092,987,150 Centre Expenditure UGX.  Failure to implement activities 143,520,000  Domestic Arrears UGX. 1,295,479,419  Non-deduction of PAYE Tax and NSSF Standard contribution on gratuity payment of UGX. 905,280,000  Delayed acquisition of Land titles at Kibuga, Makerere, Kagugube, Kibuga Kyadondo West Buganda, Bukoto, Sabaadu and Kyadondo Mengo TRADE SECTOR 7. Uganda Export  Mischarges of  Budget shortfall of UGX.440,174,957 Promotion Board Expenditure- (14%). UGX.33,338,574  Non-implementation of planned  Un-accounted for activities funds-  Lack of Certificate of compliance to UGX.50,660,500 National Development Plans (NDPs)  Non Deduction of PAYE from staff - UGX.28,515,000 WORKS SECTOR 8. Uganda National Roads  Mischarge of  Accumulation of domestic arrears to Authority expenditure - UGX.224,723,792,116 as at 30th June UGX.314,601,320,733 2018 from UGX.288,712,880,023 last year.  Payment of unbudgeted domestic arrears amounting to UGX.257,342,732,289  Nugatory expenditure amounting to UGX.15,509,054,863 in interest on delayed payments.  Budget Shortfall of UGX.1,327,579,924,254.  Unspent balance of UGX.153,101,449,686.  Failure to deliver planned outputs.

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 Implementation of Road maintenance projects;  Absence of detailed road condition assessment  Delayed advance payment  Expired and Invalid performance guarantees  Delayed payment of interim payment certificates  Delayed project works against schedule.  Overpayment – UGX.1,602,149,696  Long outstanding receivables – UGX.414,712,475,445  Potential loss of funds due to Contingent Liabilities amounting to UGX.430,013,722,276.  Delayed return of residual titles to PAPs  Un-utilized Road Maintenance project funds – UGX.2,907,291,011 9. Uganda Railway  Overstatement of  Unspent balance of Corporation revaluation gains on UGX.15,185,202,331 PPE –  Doubtful receivables not provided for UGX.169,750,536,720 – UGX.11,389,270,000  Increase in trade and other receivables from UGX.15,870,630,000 to UGX.17,276,742,000  Increase in trade and other payables by 27% from UGX.4,956,919,000 to UGX.6,287,874,000  Absence of a joint verification report on termination of the concession

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 Failure to amend the accounting manual following abolition of pre- audit function  Untitled land of over 362 square meters at Nalukolongo leading to encroachment of some of the plots

1.1 Other Audits

S/N ENTITY REMARK

EDUCATION SECTOR 1. Nakivubo war memorial Stadium  Audit not done as No Financial Statements were produced LANDS SECTOR 2. National Housing & Construction Company Limited  Un-completed Audit ENERGY SECTOR 3. Uganda Electricity Distribution Company Ltd (UEDCL) –  Un-completed Audit 2017/18 WORKS SECTOR 4. Road Sector Support Project 5 (RSSP5) Bumbobi-  Audit in-progress Lwakhaka and Rukungiri-Kihihi-Ishasha/Kanungu road works project 5. Albertine region sustainable development project  Audit in-progress (ARSDP) ACCOUNTABILITY SECTOR 6. Uganda Livestock Industries  Audit not done 7. Credit Reference Bureau  Audit not done 8. Micro Finance Support Centre (MSCL)  Audit not done 9. Custodian Board  Un-completed Audit HEALTH SECTOR 10. Uganda Nurses and Midwives Council  Un-completed Audit

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ANNEXURE IV: SUMMARY FINDINGS OF LOCAL GOVERNMENTS 4.1 Qualified Opinions SN. ENTITY BASIS FOR QUALIFIED SUMMARY OF ISSUES OPINION GULU BRANCH 1. Amuru DLG  Mischarged expenditure  Performance of Youth Livelihood Programme  Unaccounted for funds  Funding of the program  Non – compliance with the repayment schedule  Transfer of recovered funds to the recovery account in BOU  Inspection of performance of youth projects  Non – existence of Youth Interest Groups  Implementation of the Uganda Road Fund  Budget performance  Status of implementation  Summary of exceptions raised in the PPDA report  Management of natural resources  Lack of legal ownership of land, forests reserves and wetlands  Lack of land office and staffing  Unlicensed activities on natural resources  Management of capitation grants  Disclosure of capitation grants in financial statements  Basic medical equipment  Status of basic medical equipment  Lack of competent staff to handle medical equipment  Non utilization of medical equipment

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2. Apac DLG  Unsupported  Performance of Youth Livelihood Programme expenditure  Funding of the program transactions  Non – compliance with the repayment  Unexplained adjustment schedule  Transfer of recovered funds to the recovery account in BOU  Inspection of performance of youth projects  Implementation of the Uganda Road Fund  Budget performance  Status of implementation  Unsupported domestic arrears  Unbudgeted for domestic arrears  Loss of district motor cycles  Outstanding electricity bill  Management of natural resources  Lack of legal ownership of land, forest reserves and wetlands  Unlicensed/illegal activities on Natural Resources  Physical Planning Committees  Existence of Physical Planning Committee  Capitation grant in Aninolal Primary school  Disclosure of capitation grant funds in financial statements  Status of basic medical equipment  Inventory of Medical Equipment  Condition of Medical Equipment 3. Kitgum DLG  Unaccounted for funds  Performance of Youth Livelihood Programme  Funding of the programme  Non- compliance with the repayment schedule  Transfer of recovered funds to the recovery account in BOU  Inspection of performance of youth projects  Implementation of the Uganda Road Funds  Budget performance

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 Status of implementation  Pension and gratuity arrears  Local revenue shortfall  Unaccounted for SFG funds  Diversion of funds to non- budgeted for projects  Abandoned construction of motorized water solar system in Loborom HCIII Labongo Layamo sub counties  Summary of exceptions raised in the PPDA report  Management of natural resources  Lack of legal ownership of land, forests reserves and wetlands  Unlicensed Activities on Natural Resources  Absence of a District Environmental Committee  Management of road equipment  Failure to Maintain Road Equipment Records  Status of basic medical equipment  Absence of Basic Medical Equipment  Poor condition of medical equipment  Lack of qualified staff to Operate medical equipment in Health Units  Physical planning committee  Existence of Physical Planning Committee 4. Kole DLG  Funds not accounted  Performance of Youth Livelihood Programme for  Implementation of the Uganda Road Funds  Budget Performance  Status of implementation of URF  Under collection of local revenue  Summary of exceptions raised in the PPDA report  Physical Planning Committee  Existence of Physical Planning Committee

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 Management of Natural Resources  Lack of legal ownership of land, forests reserves and wetlands  Status of Basic Medical Equipment  Condition of Medical Equipment 5. Lira DLG  Mischarged expenditure  Performance of Youth Livelihood Programme  Unaccounted for funds  Funding of the Programme  Unreconciled payments  Non-compliance with the repayment schedule on the Lira DLG General  Failure to Transfer recovered funds to the Account recovery account in BOU  Unexplained payments  Implementation of the Uganda Road Fund  Unacknowledged  Budget Performance remittances to Financial  Status of Implementation Institutions  Under collection of local revenue  Unpaid salaries, pension and gratuity arrears  Understaffing  Summary of exceptions raised in the PPDA audit report

 Management of Natural Resources  Unlicensed activities on natural resources  Management of solid waste at Aler Farm  Physical Planning Committee  Existence of Physical Planning Committee  Status of Basic Medical Equipment  Condition of Medical Equipment 6. Pader DLG  Un-disclosed Advances  Performance of Youth Livelihood Programme  Unaccounted for Funds  Funding of the Program  Noncompliance with the Repayment Schedule  Failure to transfer recovered funds to the recovery account in BOU  Inspection of Performance of Youth projects  Implementation of the Uganda Road Funds  Budget Performance  Status of implementation

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 Unpaid Pensions Arrears  Under Collection of Local Revenue  Non-disbursement of YLP Project Funds to Youth Interest Groups  Summary of exceptions raised in the PPDA audit report  Management of natural resources  Lack of legal ownership of land, forests reserves and wetlands  Unlicensed /illegal activities on Natural resources  Status of Basic Medical Equipment  Physical Planning Committee  Existence of Physical Planning Committee  Performance of Physical Planning the Committee KAMPALA BRANCH 7. Mukono MC Misstatement of Financial  Budget Performance under Uganda Road Fund Statement  Under collection of Revenue - Property Tax

 Compliance Matters

 Lack of a landfill at the compositing facility

 Lack of Contract management plans and Implementation Reports

 Construction of a 10 bed Maternity ward at Goma HC III

 Lack of a contract Implementation plan and Supervision Reports

MASAKA BRANCH

8. Lyantonde  Mischarged of  YLP-Low Recovery of Funds DLG expenditure  URF-Performance of URF

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 Under Collection of Local Revenue  Delayed disbursement of YLP funds 2017/18  Unlicensed activities on Natural Resources  Condition of Medical Equipment MBARARA BRANCH 9. Ishaka-  Missing Procurement Bushenyi MC Records  Incompletely constituted Urban Physica  Planning Committee Incompletely constituted Urban Physical Planning Committee  Condition of Medical Equipment in Health Centre IV  Inadequate Equipment for Garbage Collection and Disposal MOROTO BRANCH 10. Kotido DLG  Unsupported Pension  YLP-Low Recovery of Funds Payments  URF-Performance of URF  Release of Funds for the implementation of Duplicated Sub-Projects under NUSAF III  Un-Spent Conditional Grant  Under-Collection of Local Revenue  Delays in Implementation of NUSAF Sub- Projects  Construction of Council Hall  Incomplete and abandoned Contractual Obligations  Un-Sustainable Accumulation of Domestic Arrears  Lack of Land Titles  Inadequate Infrastructure in UPE Schools  Composition of Physical Planning Committee 11. Amudat DLG  Unsupported domestic  YLP-Low Recovery of Funds arrears  URF-Performance of URF

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 Under collection of local revenue UGX 25,045,553  Unaccounted for funds  Non remittance of statutory deductions  Education Development Grant  Incomplete works  NUSAF3 Implementation  Community Access Roads (CARs)  District Environment Committee  Capitation grants  Capitation grant not in agreement with enrolment 12. Kotido MC  Unaccounted for Funds  Under Collection of Local Revenue  Unrealised Budget on Government grants  Lack of Basic Medical Equipment in Health Facilities  Management of Natural resources  Absence of a Municipal Environmental Committee  Garbage collection for Municipal Council  Failure to Undertake sensitization activities regarding garbage management  Lack of a garbage management system SOROTI BRANCH 13. Amolatar  Unaccounted for Funds  YLP-Low Recovery of Funds DLG  Unverified Expenditure  URF-Performance of URF  Unsupported Payments  Under Collection of Local Revenue for Pension and  Financing the NUSAF 3 Program Gratuity Arrears  Under Absorption of NUSAF 3 Project Funds  Failure to Dispose of Assets  Lack of Basic Medical Equipment in Health Facilities  Carrying out illegal activities on the Wet lands and Lake shores

220

 Encroachment on forests reserves  Lack of proper demarcation of Natural resources’ boundaries  Fairness of Evaluation  Tarmacking/Low cost Sealing of Corner Bangladesh  Award of VAT Contracts to non VAT registered contractor  Un-Updated Procurement contract Register  Capitation - Lack of Financial statements  Capitation Grant release to School  Procurement Compliance review by PPDA 14. Amuria DLG  Unsupported Pension  YLP-Low Recovery of Funds and Gratuity Payments  URF-Performance of URF  Mischarge of  Domestic Arrears Expenditure  Under Collection of Local Revenue  Non-Disclosure of Un-  Under Staffing Spent Balance in the  Infrastructure in UPE Schools Financial statements  Construction of Two classroom block at Agereger Primary School  Missing District Assets

 Shortage of Medical equipment in various departments  Lack of a District Physical Development Plan  Unlicensed activities on the Natural Resources 15. Kumi MC  Unaccounted for funds  URF-Performance of URF  Unsupported Pension  Under Collection of Local Revenue and Gratuity Payments  Failure to remit shared revenue to Lower Local Governments  Lack of land titles for Municipal Land  Award of VAT inclusive contracts to Non VAT Registered Persons  Capitation - Failure to prepare Termly Financial Statements

221

 Poor pupil to facilities ratio  Minimum Infrastructure Requirements for UPE Schools  Construction of a 5 stance pit latrine at Kapata Primary School  Construction of a 3 stance water closet  Budget performance FOR UWEP

 Lack of a Municipality Environmental Action Plan  Lack of proper demarcation of Natural resources’ boundaries  Carrying out illegal activities on the Wet lands  Lack of Register for Wetlands and Forests  Status of Medical Equipment at Kumi HCIV  Lack of a Physical Planning Committee  Capitation grants in UPE Schools

4.2 Unqualified Opinions SN. ENTITY KEY AUDIT MATTERS / EMPHASIS OF MATTER / OTHER MATTERS / COMPLIANCE MATTERS Arua Branch 1. Arua DLG  YLP-Low Recovery of Funds  URF-Performance of URF  Unspent Balance  Unlicensed Activities on Natural Resources  Failure to Prepare Annual District State of the Environment Report.  Budget for Physical Planning Committee.  Capitation Grant Release  Retired Staff still on Payroll  Lack of Land Titles 2. Arua MC  YLP-Low Recovery of Funds  URF-Performance of URF

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 Trade Creditors –URF  Potential Loss of Funds due to Intention to Sue the Municipal Council  Poor Debt Collection Management  Failure to Pay Approved Gratuities  Violation of the Commitment Control System  Budget Performance of Youth Livelihood Programme- 2017/18  Budget Performance of UWEP  Late Access to funds by YIGs  Inadequate equipment and facilities to manage garbage  Condition of Medical Equipment at River Oli HCIV  Lack of Competent staff to handle ophthalmic Medical Equipment  Encroachment on Wetlands and River Banks 3. Adjumani DLG  YLP-Low Recovery of Funds  URF-Performance of URF  Lack of updated wetland register and un-demarcated wetlands  Inadequate Medical Equipment in Adjumani General Hospital  Under-funding –Capitation Grant 4. Nebbi DLG  YLP-Low Recovery of Funds  URF-Performance of URF  Destruction of Artificial forest under NUSAF3 Project  Delayed Release of NUSAF 3 project Funds to the Beneficiary Groups  Defects identified in a two Class Ro Block at Otwago Non-Formal Education Learning Centre  Understaffing  Failure to gazette and monitor wetlands  Failure to provide the prescribed documentation for road equipment  Lack of required Medical Equipment  Irregular Maintenance of Medical Equipment

5. Nebbi MC  Failure to update Property Valuations list  Failure to charge and collect property rates  Unlicensed activities on Natural resources

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 Poor management of garbage disposal

6. Maracha DLG  YLP-Low Recovery of Funds  URF-Performance of URF  Absence of a Distinct Environmental Committee  Unlicensed activities on Natural resources  Condition of medical equipment  Under-collection of Local Revenue  Failure to convene Quarterly Physical planning Meetings

7. Koboko DLG  YLP-Low Recovery of Funds  URF-Performance of URF  Understaffing in Koboko Hospital  Inadequate/shortage of medical equipment  Lack of a Land register, wetland register and unclear boundaries of Natural resources of the district  Un-licensed activities on the Kochi River  Lack of a District environment Committee  Failure to approve development plans by the Physical Planning Committee (PPC)

8. Koboko MC  YLP-Low Recovery of Funds  URF-Performance of URF  Under collection of revenue/Local revenue shortfall UGX 171,767,355  Unaccounted for funds UGX 10,621,002  Cash Payments for various activities using the imprest account  Unpaid Pension and Gratuity Liabilities UGX 156,655,291  Failure to maintain logbooks for road equipment and machinery  By-laws regarding garbage management in the Municipality still in Draft form  Lack of garbage transportation equipment and machinery  Lack of legal ownership of the wetlands of the Municipality

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 Encroachment on Apa river wetlands  Unlicensed Car Washing Point in the wetlands along Apa River

9. Yumbe DLG  YLP-Low Recovery of Funds  URF-Performance of URF  Unspent Balance not returned to the Consolidated Fund  Delayed Disbursement of Funds to Groups  Failure to Remit Sub-counties’ Share of Collected Local Revenue  Nugatory Expenditure  Lack of Budget Provisions for the Committee  Failure to Issue Occupational Permits, Monitor and Control Developments  Condition of Medical equipment  Inspections of Health Centres  Award of Contract to a Company that Failed the Eligibility Test  Wasteful Expenditure on Kurunga – Tokuru Road  PPDA Reports for FY 2017/18

10. Zombo DLG  YLP-Low Recovery Of Funds  URF-Performance of URF  Under collection of Local Revenue  Under staffing  Lack of legal ownership of land, forests reserves and wetlands.  Unlicensed activities on Natural resources

11. Pakwach DLG  URF-Performance of URF  Wrong calculation of PAYE deductions  Summary of exceptions raised in the PPDA report for F/Y 2017/18  Encroachment and illegal Activities on wetlands and Forest reserves in the district  Inventory of medical equipment  Lack of Fully Constituted Physical Planning Committee

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12. Moyo DLG  YLP-Low Recovery Of Funds  URF-Performance of URF  Trade Creditors –URF  Potential Loss of Funds due to Intention to Sue the Municipal Council  Poor Debt Collection Management  Failure to Pay Approved Gratuities  Budget Performance of Youth Livelihood Programme- 2017/18  Under-collection of Local Revenue.  PPDA Audit Report  Failure to Prepare Annual District State of the Environment Report.  Unlicensed Activities on Natural Resources  Condition of Medical Equipment

Fort portal Branch 13. Kamwenge DLG  YLP-Performance  Underfunding of the programme  Noncompliance with the Repayment Schedule  Transfer of Recovered Funds to the Recovery Account in BOU.  Inspection of Performance of Youth projects  URF-Performance of URF  Unrealized Government Releases  Lack of land titles  Management of Natural Resources  Lack of legal ownership of land, forest reserves and wetlands  Lack of a District Environmental Committee  Capitation Grant  Underfunding  Under Staffing  Status of Basic Medical Equipment  Inventory of Medical Equipment  Condition of Medical Equipment  Competence of Staff to Handle Medical Equipment

226

 Physical Planning Committee  Un performing physical planning Committee

14. Fort Portal MC  YLP-Low Recovery Of Funds  Underfunding of the Programme  Failure to transfer recovered funds to the recovery account in BoU  URF-Performance of URF  Local Revenue Shortfall - Contracted Revenue  Management of Natural Resources  Illegal activities on Natural resources 15. Kabarole DLG  YLP-Low Recovery Of Funds  Funding of the Programme Noncompliance with the Repayment Schedule  Failure to Transfer Recovered Funds to the Recovery Account in BOU.  Inspection of Performance of Youth projects  URF-Performance of URF  Under Collection of Local Revenue  Status of Basic Medical Equipment  Inadequate/ Un-available/ Faulty Medical Equipment

16. Kasese DLG  YLP-Low Recovery Of Funds  Funding of the Programme Noncompliance with the Repayment Schedule  Failure to Transfer Recovered Funds to the Recovery Account in BOU.  Inspection of Performance of Youth projects  URF-Performance of URF  Management of Natural Resources  Lack of Legal Ownership of Land, Forests Reserves and Wetlands.  Unlicensed/Illegal Activities on Natural Resources  Status of Basic Medical Equipment  Inventory of Medical Equipment  Poor Condition of Medical Equipment  Capitation Grant

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 Lack of financial statements and books of accounts for financial year 2017/2018  Lack of an Annual Budget for Financial year 17/18 17. Bundibugyo DLG  URF-Performance of URF  Funds not accounted for  Local Revenue Shortfall  Underfunding of Youth Livelihood Programme  Inspection of Performance of Youth Projects  Garnish Orders fr Court Cases  Failure to remit Statutory deductions  Capitation Grants  Lack of Financial Statements and Books of Accounts - Busu Primary School  Management of Natural Resources  Failure to Demarcate and Monitor Natural resources  Unlicensed Activities on the Forest Reserves  Failure to Constitute the District Environment Committee

 Management of Procurement  Payments made to companies over and above the awarded contract price  Status of Basic Medical Equipment  Inadequate Medical Equipment

18. Ntoroko DLG  Performance of UR  Over-Payment of Salary Deductions  Management of Natural Resources  Unlicensed/Illegal Activities on Natural Resources  Lack of District Environmental Committee  Status of Basic Medical Equipment  Inadequate Medical Equipment 19. Bunyangabu DLG  PERFORMANCE OF URF URF-Performance of URF  Lack of Land Titles  Management of Procurement  Irregular Direct Procurements  Management of Natural Resources

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 Illegal Activities on Natural Resources  Absence of a District Environmental Committee  Inadequate/ Un-available/ Faulty Medical Equipment  Availability of Skilled Personnel to Manage Medical Equipment  Road Equipment  Lack of Logbooks for Se Motor Vehicles  Audit of Physical Planning Committees  Lack of a District Physical Development Plan  Budget for the Physical Planning Committee 20. Kyegegwa DLG  URF-Performance of URF  Budget performance  Status of Implementation  YLP-Low Recovery Of Funds  Underfunding of the Youth Livelihood Programme (2017/2018)  Non-compliance with the Repayment Schedule  Failure to transfer recovered funds to the recovery account in BOU.  Inspection of Performance of Youth projects  Management of Natural Resources  Unlicensed/Illegal Activities on Natural Resources  Lack of District Environmental Committee  Status of Basic Medical Equipment  Inadequate Medical Equipment  Poor Condition of Medical Equipment  Management of Road Equipment  Failure to maintain Road Equipment Records  Lack of Land Titles 21. Kyenjojo DLG  YLP-Low Recovery Of Funds  Underfunding of the programme  Noncompliance with the Repayment Schedule  Transfer of Recovered Funds to the Recovery Account in BOU.  Inspection of Performance of Youth projects  PPERFORMANCE OF URF  Budget performance  Status of Implementation  Capitation Grant

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 Lack of Financial Statements for the FY 2017/18  Payroll  Commuted Pension and Gratuity (CPG) Over Payments  Audit of Physical Planning Committees  Lack of a District Physical Development Plan  Absence of Budget Allocation for Physical Planning Committees  Status of Basic Medical Equipment  Inadequate Medical Equipment 22. Kasese MC  YLP-LOW RECOVERY OF FUNDS  Underfunding of the programme  Noncompliance with the Repayment Schedule  Failure to Transfer of Recovered Funds to the Recovery Account in BOU.  Inspection of Performance of Youth projects  PERFORMANCE OF URF  Donor Funds Shortfall  Local Revenue Shortfall  Domestic Arrears  Management of Road Equipment  Idle Road Equipment  Garbage Management  Non-functional Equipment for Garbage collection and disposal  Lack of a Proper Solid Waste Management System  Management of Natural Resources  Lack of Legal Ownership of Land and Wetlands  Budgets for the Physical Planning Committee GULU BRANCH 23. Agago DLG  Performance of Youth Livelihood Program  Funding of the program  Non – compliance with the repayment schedule  Transfer of recovered funds to the recovery account in BOU  Inspection of performance of youth projects  Gratuity and pension arrears  Motor vehicles due for disposal  Summary of exceptions raised in the PPDA report

230

 Management of Natural Resources  Absence of a district environmental Committee  Management of road equipment  Failure to maintain road equipment records  Inadequate maintenance of road equipment  Physical planning Committee  Existence of physical planning Committee  Capitation grant  Lack of financial statements 24. Alebtong DLG  Performance of Youth Livelihood Program  Funding of the program  Non – compliance with the repayment schedule  Transfer of recovered funds to the recovery account in BOU  Inspection of performance of youth projects  Implementation of Uganda Road Funds  Unpaid gratuity, salaries and pension arrears  Payment for no work done  Under staffing  Management of natural resources  Lack of legal ownership of land, forests reserves and wetlands  Existence of land office and staffing  District environment Committee  Unlicensed/ Illegal activities on natural resources  Management of road equipment  Failure to maintain road equipment records  Status of basic medical equipment  Physical planning Committee  Failure to institute a physical planning Committee  Capitation grant  Capitation grant releases to Agoro primary school  Supervision and monitoring reports by the district 25. Apac municipal  Implementation of the Uganda Road Funds council  Unpaid Pension Liabilities  Salary arrears  Management of natural resources

231

 Lack of legal ownership of land, forests reserves and wetlands  Unlicensed/ illegal activities on natural resources  Management of Garbage  Lack of bye-laws regarding garbage management  Lack of a garbage management system 26. Gulu DLG  Performance of Youth Livelihood Programme  Failure to transfer recovered funds to the recovery account in BOU  Inspection of performance of youth projects  Implementation of the Uganda Road Funds  Budget performance  Status of implementation  Contingent liability  Unpaid pension and gratuity arrears  Payables  Incomplete and abandoned work  Incomplete renovation and expansion of OPD in Lugore HCII Palaro sub county  Incomplete/ abandoned low cost sealing of Laroo- Pageya Road 2Km  Non- disbursement of YLP funds for financial year 2017/2018  Non-assessment of taxable revenue  Summary of exceptions raised in the PPDA report  Management of natural resources  Unlicensed activities on natural resources  The physical planning Committee  Establishment of the physical planning Committee  Performance of the physical planning Committee  Non budgeting for the physical planning Committee activities  Management of road equipment  Failure to maintain road equipment records  Non-functional/ grounded equipment  Status of basic medical equipment  Failure to record medical equipment in the district assets register  Missing procurement records 27. Gulu municipal  Performance of Youth Livelihood Programme council  Funding of the program

232

 Noncompliance with the repayment schedule  Transfer of recovered funds to the recovery account in BOU  Inspection of performance of youth projects  Implementation of the Uganda Road Funds  Under-absorption/ Unspent balances  Unaccounted for funds  Uganda Support to Municipal Infrastructure Development Program (USMID)  Summary of exceptions raised in the PPDA report  Management of natural resources  Lack of legal ownership of land, forest reserves and wetlands  Unlicensed activities in the wetlands  Garbage Management  Lack of bye-laws regarding garbage management

28. Kitgum municipal  Implementation of the Uganda Road Funds council  Loss of funds due to garnishing  Payment for shoddy works  Under staffing  Delayed disbursement of funds to approved beneficiary groups 2017/2018  Unexplained variances in amounts disbursed to YIGs  Failure to conduct property valuation  Garbage Management  Lack of bye-laws regarding garbage management  Break down of garbage collection equipment  Lack of a garbage management system  Performance of the Physical Planning Committee  Irregular appointment of a Land Surveyor  Inadequate funding of the physical planning Committee activities  Inadequate Performance of the Physical Planning Committee  Lack of contract management files 29. Lamwo DLG  Performance of Youth Livelihood Programme  Pension and Gratuity Arrears  Loss of 3 Motor Cycles

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 Summary of exceptions raised in the PPDA audit report  Management of natural resources  Lack of legal ownership of land, forests reserves and wetlands  Unlicensed activities on natural resources  Lack of District Land Office  Absence of the District Environmental Committee  Capitation grant  Capitation grant releases to school  Status of basic medical equipment  Poor condition medical equipment  Lack of Competent staff to Handle Medical Equipment

30. Lira municipal  Performance of Youth Livelihood Programme council  Funding of the Programme  Non-compliance with the Repayment Schedule  Transfer of recovered funds to the recovery account in BOU  Inspection of Performance of Youth projects  Implementation of the Uganda road Funds  Support to Municipal Infrastructure Development Program (USMID)  Management of natural resources  Lack of legal ownership of land, forests reserves and wetlands  Municipal Environmental Committee  Unlicensed/ illegal activities on Natural resources  Garbage management  Bye-laws regarding garbage management  Poor management of Solid Waste at Aler Composite Plant  Establishment of Urban Physical Planning Committees 31. Nwoya DLG  Performance of Youth Livelihood Programme  Funding of the Programme  Non-compliance with the Repayment Schedule  Transfer of recovered funds to the recovery account in BOU  Inspection of Performance of Youth projects  Implementation of the Uganda Road Funds  Budget performance  Status of implementation

234

 Unpaid, Salaries , Pensions Gratuity Arrears  Payment for Work not done at Anaka Central P/S  Payment for Work not done at Todora HCII  Payment for Work not done at Lulyango Primary School  Construction of Box Culvert on Ceke Stream/ Diversion of Funds  Summary of exceptions raised in the PPDA audit reports  Management of Natural Resources  Lack of legal ownership of land, forests reserves and wetlands.  Unlicensed activities on natural resources  Status of Basic Medical Equipment  Condition/Status of medical equipment  Availability of skilled personnel to manage medical equipment  Physical Planning Committee  Existence of Physical Planning Committee  Capitation grant  Capitation grant releases to school 32. Omoro DLG  Implementation of the Uganda Road Funds  Unpaid Pension Liabilities  Un-disclosed Advances  Staff in acting Position beyond stipulated time  Salary Over payments  Management of Road Equipment  Lack of Up-to-date equipment registers  Failure to maintain road equipment records  Management of capitation grants  Disclosure of capitation grant funds in financial statements  Failure to prepare financial statements  Management of Natural Resources  Unknown Boundaries of Wetlands and Forest Reserves  Absence of a Physical Planning Committee 33. Oyam DLG  Performance of Youth Livelihood Programme  Funding of the Programme  Non-compliance with the repayment schedule  Transfer of recovered funds to the recovery account in BOU

235

 Inspection of Performance of Youth projects  Implementation of the Uganda Road Funds  Unpaid Gratuity Arrears  Over expenditure on Council activities  Construction of Abok Seed School  Supply of Double Cabin Pickup  Summary of exceptions raised in the PPDA audit report  Incomplete Physical Planning Committee  Status of Basic Medical Equipment  Condition of Medical Equipment  Management of natural resources  Unlicensed /illegal activities on Natural resources HOIMA BRANCH 34. Hoima DLG  YLP-Low Recovery Of Funds  Performance Of URF  Under Collection of Local Revenue  Procurement Compliance review by PPDA  Failure to maintain records for the management of road equipment  Natural Resources Management  Lack of Environment Committee  Un-licensed activities on Gazetted Natural Resources  Inadequate Medical Equipment  Lack of Land Titles 35. Buliisa DLG  YLP-Low Recovery Of Funds  Performance Of URF  Under Collection of Local Revenue  Funding for program in 2017/2018  Inadequate maintenance of road equipment  Natural Resources Management  Lack of Environment Committee  Lack of Titles for the District Land, forests and wetlands  Un-licensed Activities on Gazetted Natural Resources  Inadequate medical equipment  Physical Planning 36. Kagadi DLG  Performance Of URF

236

 Salary Arrears  Budget Performance for Youth Livelihood Program for the FY 2017/18  Lack of an Approved 5 year Development Plan  Natural Resources  Unlicensed/Unapproved Activities on Natural Resources  Lack of Legal Ownership of Forests Reserves and Wetlands  Status of Basic Medical Equipment.  Condition of Medical Equipment 37. Kakumiro DLG  Performance Of URF  Budget Performance  Budget performance for Youth livelihood program for the FY 2017/18  Inspection of Youth Groups funded during 2017/18 financial year  Kasozi Youth Boda Boda Group  Natural Resources  Lack of legal ownership of land, forest reserves and wetlands  Unlicensed Activities on Natural Resources 38. Kibaale DLG  YLP-Low Recovery Of Funds  Payables  Budget Performance  Performance for Youth Livelihood Program Financial Year 2017/1  Disbursement and recovery status of funds during 2017/18  Performance Of URF  Inadequate Medical Equipment at KibaaleHC IV  Natural Resources  Lack of Legal Ownership of Land, Forest Reserves and Wetlands  Unlicensed Activities on Natural Resources 39. Kiboga DLG  YLP-Low Recovery Of Funds  Performance Of URF  Under Staffing  Natural Resources  Unlicensed Activities on Natural Resources  Inadequate medical equipment in Kiboga Hospital 40. Kiryandongo DLG  YLP-Low Recovery Of Funds  Performance Of URF  Domestic Arrears

237

 Budget performance for Youth livelihood program for the FY 2017/18  Delayed disbursement of funds to groups  Delayed payment of residual salary arrears  Condition of Medical Equipment 41. Kyankwanzi DLG  YLP-Low Recovery Of Funds  Performance Of URF  Reconciliation of Central Government Releases  Failure to Maintain Road Equipment Records  Lack of a Distinct Environmental Committee  Unlicensed Activities on Natural Resources  Inadequately funding for Natural Resource  Failure to have evidence of ownership of Land, forests and wetlands  Inadequate Medical Equipment 17  Lack of Skilled Personnel to Operate an Anesthetic Machine 42. Hoima DLG  YLP-Low Recovery Of Funds  Performance Of URF  Procurement Compliance review by PPDA  Failure to maintain records for the management of road equipment  Lack of Environment Committee  Un-licensed activities on Gazetted Natural Resources  Inadequate Medical Equipment  Lack of Land Titles 43. Hoima Municipal  Performance Of URF Council  Accumulation of Domestic Arrears  Under Absorption of USMID Development Grant  Delayed Completion of USMID Projects  Irregular Procurement Method  Lack of Certificate of Ownership of Wetlands.  Unlicensed Activities in Wet Lands  Lack of Approved Bye-Laws Regarding Garbage Management  Lack of Proper Maintenance of Road Equipment

44. Masindi DLG  YLP-Low Recovery Of Funds  Performance Of URF

238

 Pension Liability  Payables  Contingent Liabilities  Budget performance for Youth livelihood program for the FY 2017/18  Failure to maintain road equipment records  Inadequate maintenance of road equipment  Lack of legal ownership of land, forests reserves and wetlands  Absence of a Distinct Environmental Committee  Unlicensed/ un approved activities on Natural resources  Physical planning at the district  Non-existence of Physical Planning Committee

45. Masindi municipal council  YLP-Low Recovery Of Funds  Performance Of URF  Unverified Accounts Payable  Non- remittance of Local Revenue to Divisions  Budget performance for Youth livelihood program for the FY 2017/18  Inadequate maintenance of road equipment

 Incomplete Physical Planning Committee

 Un-licensed activities on Gazetted Natural Resources

 Inadequate maintenance of garbage collection equipment

JINJA BRANCH 46. Bugiri DA  Performance of Youth Livelihood Programme  Implementation of the Uganda Road Fund  Under Collection of Local Revenue  Understaffing  Court cases  District Education Service Delivery  Summary of exceptions raised in the PPDA audit report of the District for the financial year ended 30th June, 2018

239

 Management of Road Equipment  Physical Planning Committee  Medical Equipment  Management of natural resources  Capitation Grant 47. Bugiri MC  Implementation of the Uganda Road Fund  Incompletely Vouched Funds  Failure to Carry out Property Tax Assessment  Understaffing  Garbage Management  Lack of bye-laws regarding garbage management  Collection and Transportation of solid waste  Assessment of the Impacts of Municipal solid waste activities on the environment  Lack of a full Physical Planning Committee 48. Iganga MC  Performance of Youth Livelihood Programme  Implementation of the Uganda Road Fund (PERFORMANCE OF URF)  Domestic Arrears  Receivables  Capitalization of expenses on Roads and Bridges, computers and other equipment’s in the financial statements  Failure to implement activities as per the Municipal Development Plan for the period 2015/16 - 2019/20  Understaffing  Payment of deductions to Financial Institutions  Education Service delivery  Primary Leaving Performance  Staff Accommodation  Court cases  Natural Resources  Unlicensed/unapproved activities on Natural resources  Garbage Collection for Municipalities  Management of Road Equipment in the Local Governments

240

 Failure to dispose of assets  Physical Planning Committees 49. Jinja MC  Performance of Youth Livelihood Programme  Implementation of the Uganda Road Fund  Payables and Pension Liabilities  Receivables  Domestic arrears paid outside appropriation  Uganda Support to Municipal Infrastructure Development Programme (USMID)  Management of Natural resources  Garbage Collection  Status of basic medical equipment  Management of Road Equipment in the Local Governments 50. Iganga DA  Performance of Youth Livelihood Programme  Implementation of the Uganda Road Fund (PERFORMANCE OF URF)  Lack of Land Titles  Court Cases  Payroll Management  Procurement  Capitation Grant  Status of basic medical equipment  Uganda Wen Empowerment Project  Management of Natural Resources  Failure to approve building plans 51. Namayingo DA  Performance of Youth Livelihood Programme  Implementation of the Uganda Road Fund (PERFORMANCE OF URF)  Under Collection of Revenue  Payroll Management  Inconsistencies between IPPS and IFMS payments  Irregular payment of Hard to reach allowances  Remittance of Shared Revenue to Lower Local Governments (LLGs)  Understaffing

241

 Inadequate Water Coverage  Management of Natural resources 52. Kamuli DA  Performance of Youth Livelihood Programme  Implementation of the Uganda Road Fund (PERFORMANCE OF URF)  Revenue under performance  Excess payment of VAT to Contractors  Road Equipment  Loss of Assets by the District  Unlicensed/Unapproved Activities on Natural Resources  District physical planning Committee composition  Availability of skilled personnel to manage medical equipment  Health service delivery  Capitation and Education Service Delivery  District, Urban and Community Access Roads Minimum National Standards of Service Delivery 53. Luuka DA  Performance of Youth Livelihood Programme  Implementation of the Uganda Road Fund  Outstanding Payables and Pension Liability  Court cases  Lack of land titles  Management of Natural resources  Capitation Grant  Status of Basic Medical Equipment  Condition of Medical Equipment  Performance of the Physical Planning Committee  Road Equipment 54. Mayuge DA  Performance of Youth Livelihood Programme  Implementation of the Uganda Road Fund (PERFORMANCE OF URF)  Under absorption of funds  Understaffing  Lack of Land Titles  Inspections of Kityerera HCIV

242

 Management of Natural Resources  Capitation Grant  Status of Basic Medical Equipment  Physical Planning Committees 55. Namutumba DA  Performance of Youth Livelihood Programme  Implementation of the Uganda Road Fund  Payables (Domestic Arrears)  Under Collection of Local Revenue  Over payment of salary  Education Service Delivery  Management of Natural Resources  Lack of Land Titles  Status of basic medical equipment  Physical planning Committee  Capitation Grant 56. Lugazi MC  Implementation of the Uganda Road Fund  Accumulation of domestic arrears  Failure to Implement Budget as approved by Council  Over Payments of Salary  Lack of Land Titles  Failure to communicate arithmetic corrections and price adjustments  Understaffing  Garbage Collection for Municipalities  Management of Road Equipment in the Local Governments  Physical Planning Committee 57. Jinja DA  Management of the Youth Livelihood project  Implementation of the Uganda Road Fund Domestic Arrears  Audit of Primary School  Understaffing  Management of Natural Resources  Status of Basic Medical Equipment in Health Facilities  Physical Planning Committees

243

58. Buyende DA  Performance of Youth Livelihood Programme  Implementation of the Uganda Road Fund  Domestic arrears  Budget Performance  Excess payment of VAT to Contractors  Unlicensed Activities on Natural Resources  Composition of the District Physical Planning Committee  Medical Equipment  Inadequate Basic Medical Equipment at Kidera HC IV 59. Kamuli MC  Youth Livelihood programme  Implementation of the Uganda Road Fund  Transfers to other government units  Over payment of salary  Lack of Land Titles  Underfunding in Capitation Grant  Understaffing  Management of Road Equipment  Management of natural resources  Garbage Management 60. Kaliro DA  Performance of Youth Livelihood Programme  Implementation of the Uganda Road Fund Failure to implement Budget as approved by Council  Understaffing  Inadequate Water Coverage  Accessibility Indicators  Management of Natural Resources  Status of basic Medical Equipment  Procurement 61. Njeru MC  Youth Livelihood programme  Implementation of the Uganda Road Fund  Receivables

244

 Payables  Local Revenue Shortfall  Under Staffing  Lack of Physical Development Plans  Status of Staff and Accommodation in Health Centers  Lack of a Health Centre IV KAMPALA BRANCH 62. Buikwe DLG  Performance of Youth Livelihood Programme  Underfunding of the Programme  Non-compliance with the Repayment schedule  Transfer of recovered funds to the Recovery Account in BOU  Inspection of Njeru Youth Group project  Implementation of the Uganda Road Funds  Budget Performance  Status of Implementation  Routine Manual Maintenance  Periodic Maintenance  Outstanding Commitments of UGX.110,530,664  Un utilized Funds under ICEIDA Project  Insufficient School Infrastructure  Status of Fish handling Facility at Kiyindi  Inspection at Kawolo Hospital  Insufficient housing facilities at Kawolo Hospital  Stock out of Essential medicines and health supplies at Kawolo Hospital  Under staffing at Kawolo Hospital  Status of Basic Medical Equipment at Kawolo Hospital  Management and Utilization of Natural Resources  Pollution of Environment  Illegal sand mining on the lake  Lack of a fully constituted Physical Planning Committee 63. Mukono DLG  Performance of Youth Livelihood Programme  Funding of the Programme  Non-compliance with the Repayment Schedule  Transfer of recovered funds to the Recovery Account in BOU

245

 Review of Sampled Youth Groups Files  Implementation of the Uganda Road Funds  Failure to carry out Property Valuation  Misdirected Secondary School Grants  Insufficient Infrastructure in UPE Schools  Under staffing  Management and Utilisation of Natural resources  Lack of a District Environment Committee  Lack of proper demarcation of wetlands  Unlicensed Activities in the Wetlands  Status of Basic Medical Equipment at Kojja HC IV  Poorly equipped Ophthalmic Department  Inadequate Beds in the Maternity Ward  Physical Planning Committees  Inadequate composition of the District Physical planning Committee  Lack of Physical Development Plans 64. Wakiso DLG  Performance of Youth Livelihood Programme  Implementation of the Uganda Road Funds  Delayed Works on Nansana-Kireka-Biira Road (1km)  Outstanding Commitments  Outstanding Salary Arrears of UGX.61,419,581  Pension Arrears  Shortfall in Government Releases  Unspent/Un-Utilized conditional Grant  Pensioners not on the Payroll  Unrealized Royalties fr Ministry of Energy  Failure to meet minimum standards at Wakiso Health Centre IV  Entebbe Hospital - Outstanding utility bills  Audit of UPE Schools Capitation Grant  Mismanagement of UPE Funds at Kyengeza Muslim P/S  Insufficient Infrastructure in UPE Schools  Management of Procurement  Failure to prepare Evaluation tools  Irregularities in the procurement for the Rehabilitation of Boreholes

246

 Lack of signed contracts  Management and Utilisation of Natural Resources  Lack of a land Register  Lack of a lease Register  Management of Road Equipment  Lack of Road safety Equipment  Non-functioning Road equipment  Inadequate mechanical imprest  Lack of Physical Planning Committee  Entebbe Hospital  Existence and Status of Medical equipment  Essential Medicines and Health supplies Stock Outs 65. Buvuma DLG  Performance of Youth Livelihood Programme  Underfunding of the Programme  Non Compliance with the Repayment Schedule  Transfer of recovered funds to the recovery account in BOU  Implementation of the Uganda Road Funds  Routine manual maintenance  Routine Mechanised Maintenance  Periodic Maintenance  Lack of Property Valuation Roll  Construction of the District Administration Block under Phase II  Un Confirmed Ownership of Land  Lack of Land titles  Under Staffing  Management and Utilization of Natural Resources  Lack of a District Environment Committee  Failure to carry out demarcation of Wetlands  Encroachment on Natural Resources  Status of Medical Equipment at Buvuma Health Centre IV  Lack of Essential Medical Equipment  Lack of Power at the Health Centre IV  Lack of a fully Constituted District Physical Planning Committee 66. Nakasongola DLG  Performance of Youth Livelihood Programme - Underfunding of the Programme

247

- Non-compliance with the Repayment Schedule - Transfer of Recovered Funds to the Recovery Account in BOU - Inspection of Performance of Youth Projects  Implementation of the Uganda Road Funds - Budget Performance - Status of Implementation - Routine Manual Maintenance - Routine Mechanised Maintenance  Outstanding Pension and Un Paid Salaries  Under staffing  Staff on Interdiction  Lack of Property Valuation List  Delayed Disbursement of funds to Youth Groups for FYR:2017/18  Non-functional wells and hand pumps  Management of Natural Resources  Lack of Land Register  Failure to secure Land Titles  Lack of Lease Register  Lack of a District Environment Committee  Insufficient Funding to the Natural Resources Unit  Unlicensed Activities carried out in the Gazetted Wetlands  Status of Basic Medical Equipment at Nakasongola HC IV  Physical Planning Committee  Lack of a fully constituted Physical Planning Committee  Inadequate Physical Planning Committee Meetings  Lack of Physical Development Plans 67. Mityana DLG  Performance of Youth Livelihood Programme  Implementation of the Uganda Road Funds  Budget Performance  Status of Implementation  Routine Manual Maintenance  Routine Mechanized Maintenance  Un realized Revenue  Delayed Remittance of funds to youth groups(2017/18)  Audit of Universal Primary Education Schools

248

 Insufficient Infrastructure  Lack of access to safe water in schools  Inspection of School Facilities  Mityana Hospital  Insufficient Staff Housing facilities  Under Staffing (Un-filled Staff Positions)  Status of Basic Medical Equipment  Status of Medical Equipment at Health Centre IVs  Status of Basic Medical Equipment at Mityana Hospital  Capitation Grant not in agreement with enrolment  Management and utilisation of Natural Resources  Unlicensed Activities in Wetlands  Lack of an approved Physical Development Plan  Summary of exceptions raised in the PPDA audit report of the District for the financial year ended 30th June, 2018 68. Mpigi DLG  Performance of Youth Livelihood Programme  Underfunding of the Programme  Non-compliance with the Repayment schedule  Transfer recovered funds to the recovery account in BoU  Inspection of Nabusanke Youth Piggery Project  Lack of Physical address  Disintegration of Nabusanke Youth Piggery Project  Implementation of the Uganda Road Funds  Budget Performance  Status of implementation  Routine manual maintenance  Routine mechanised maintenance  Outstanding Pension and Gratuity Arrears  Lack of Property Valuation List  Insufficient School Infrastructure  Status of Lake Victoria Environment Management Project Phase II (LVEMP II)  Management of Natural Resources  Lack of Lease Register  Failure to Secure Land titles

249

 Under performance of the district land board  Irregular Issuance of two land titles on the same piece of Land in Kamaliba  Lack of a District Environment Committee  Unlicenced Sand mining carried out in the Gazetted Wetlands  Lack of a District Environment Action Plan  Status of Basic Medical Equipment at Mpigi HC IV  Lack of Physical Development Plans  Inadequate Funding for the Physical Planning Committee 69. Butambala DLG  Performance of Youth Livelihood Programme  Implementation of the Uganda Road Funds - Budget Performance - Status of implementation - Routine manual maintenance - Routine mechanised maintenance - Periodic maintenance - In adequate Monitoring and Supervision of Road works

 Un verified Outstanding Pension and Gratuity Payments  Under Staffing  Gombe Hospital  Inadequate Funding  Hospital Dilapidated Buildings  Discharge of Sewage into the Community by the Hospital  Lack of Land title for the Hospital  Management of Procurement  Drilling and Installation of Hand pump Borehole to Solar Powered Boreholes  Failure to Meet Evaluation Criteria  Inspection of the motorized Pump  Procurement Evaluation for Construction of classrooms at Mavugera P/S  Construction of Facilities at Bwetyabya UMEA P/S  Management of Natural Resources  Absence of Environment Committees

250

 Conservation of Natural Resources  Encroachment on Forest Reserves  Un controlled Human Activities on Wetlands  Lack of a District Land Office  Lack of a Land Board  Inflated Pupil Enrolment  Status of Basic Medical Equipment at Gbe Hospital 70. Kayunga DLG  Performance of Youth Livelihood Programme - Underfunding of the Programme. - Noncompliance with the repayment schedule - Transfer of the Recovered Funds to the Recovery Account in BOU - Inspection of Performance of Youth projects - Kayonjo Piggery Youth Project - Record keeping - Bwetyaba Youth dairy Production - Record Keeping - Failed Youth Livelihood Projects  Implementation of the Uganda Road Funds - Budget Performance - Status of implementation - Routine manual maintenance - Under Utilization of Road Gangs - Routine mechanised maintenance - Periodic maintenance - Burnt district Grader  Outstanding Pensions  Outstanding Commitments  Construction of Nakyesa Public Latrine  High School Dropout Rates  Failure to collect Local service Tax (LST) fr Non-Government employees  Management and Utilisation of Natural Resources  Ruining and encroachment on wet land  Failure to demarcate wetlands  Lack of a District Environmental Action Plan

251

 Status of Essential medical equipment at the Kayunga General Hospital  Challenges faced by Kayunga HCIVs  District Road Equipment Inadequate Road Equipment  In adequate Infrastructure in Primary schools 71. Luwero DLG  Performance of Youth Livelihood Programme - Under funding of the Programme - Non Compliance with Repayments Schedules - Un confirmed transfers of Recovered funds to Recovery Account in BOU - Inspection of performance of Youth Projects - Nakigoza Youth Tato Growing Project - Record keeping - Kanyogoga Youth Piggery Project - Poor Record keeping  Implementation of the Uganda Road Funds - Inspection of Kikoza-Kigoloba-Naluvule Road (8.9Kms) - Failure to carry out Routine Manual Maintenance on District Roads  Mischarge of Expenditure  Un accounted for funds  Financial Loss  Outstanding Creditors  Outstanding Salary and Pension Arrears  Diversion of PHC and Agricultural Extension Services Wage to Pay Primary Teachers Salary  Un-updated property valuation list  Under staffing and related  Un Recovered UWEP Revolving Funds  Un approved borehole Rehabilitation Assessments  Difficulties in accessing Road equipment fr Regional Workshops  Failure to Perform Physical count for students under USE  Review of Eye Clinic Donation at Luwero Health Centre IV  Management of Procurement  Absence of a Contracts Register  Absence of 10% Performance securities for Procurement contracts

252

 Lack of a representative of Lower Local Government on Evaluation Committee  Management of Natural Resources  Environmental dilapidation of district wetlands  Failure to de-gazette Bombo Local Forest Reserve  Poor Status of basic Medical Equipment  Lack of a District Physical Development Plan  Absence of District land and Lease Registers  Absence of legitimate Registration of the District Land  Capitation Grants  Under funding of the USE and UPE capitation programs  Construction of a 2 classro block and others at Bulamba Primary Schoo  Status of Basic Medical Equipment 72. Nakaseke DLG Performance of Youth Livelihood Programme - Noncompliance with the Repayment schedule - Inspection of Performance of Youth projects - Lack of Project Records  Implementation of the Uganda Road Funds - Budget Performance - Status of implementation  Under staffing  Double Deployment of Head Teachers in One School  Delayed disbursement of funds to Youth and Wen Groups FYR 2017/18  Construction of Primary Schools under Global Partnership for Education  Direct Payments by the Ministry of Education to the Contractor  Incomplete works  Construction works under School Facilities Grant  Lack of Basic Infrastructure in Primary Schools  Inspection of Semuto HCIV  Inadequate Funding of Nakaseke Hospital  Theft of Hospital equipment at Nakaseke Hospital  Management and Utilisation of Natural Resources  Lack of legal ownership of Nabika forest reserves and wetlands  Absence of a Distinct Environmental Committee  Lack of Lease Register

253

 Illegal Land Management of the District land by Luwero District Land Board  Lack of a Wetlands Register  Degradation and Illegal activities on River Mayanja wetland  Lack of Land Title for health facilities  Status of basic medical equipment in health facilities

73. Makindye MC  Implementation of the Uganda Road Funds - Budget Performance - Status of implementation - Routine manual maintenance - Routine mechanized maintenance - Periodic maintenance - Unimplemented works - Inspection of Bunamwaya-Kisigula-Mutundwe Mirembe Road - Inadequate Road Equipment - Lack of Bill of Quantities/Detailed scope of works - Outstanding Commitments  Unspent Conditional Grants  Revenue Management  Lack of Local Revenue appeals tribunal  Under staffing  Lack of legal ownership of Municipal Assets  Developments on untitled land  Underfunded Youth Livelihood Program  Management and Utilization of Natural Resources  Illegal developments in Kaliddubi wetland  Status of Basic Medical Equipment at Ndejje HC1V  Garbage Management  Management of Procurement  Irregular Procurement for construction of a perimeter wall  Lack of Contract Implementation plans and management Reports  Physical Planning Committee  Capitation Grants  Under realization of Capitation Grants

254

 Insufficient School Infrastructure 74. Entebbe MC  Implementation of the Uganda Road Funds - Budget Performance - Status of implementation - Routine manual maintenance - Routine mechanised maintenance - Periodic maintenance - Inadequate Road Equipment - Outstanding Pension Liability - Outstanding Commitments  Uganda Support to Municipal Infrastructure Development Programme (USMID)  Low Absorption of USMID Project Funds  Youth Livelihood Program Non Compliance with repayments Schedules  Education Servises - Insufficient Infrastructure  Garbage Collection - Lack of sufficient equipment/facilities to collect garbage 75. Nansana MC  Implementation of the Uganda Road Funds - Budget Performance - Status of Implementation - Routine Manual Maintenance - Routine Mechanised Maintenance - Periodic Maintenance - Lack of Sufficient Road Equipment  Under Collection of Local Revenue  Review of Youth Livelihood Program Performance financial year 2017/2018  Project Inspection  Kiteredde Youth Mukama Afaayo Piggery  Physical address  Maganjo B. Youth Peasant Welding & Metal Works  Physical Address  Failure to meet minimum standards of Primary Schools  Under staffing  Cposition of the Physical Planning Committee

255

 Management and Utilization of Natural Resources  Lack of Municipal Environment Committee  Unauthorised Structures on Wetlands  Management of Garbage  Existence and Status of Medical Equipment at Buwambo HC1V 76. Mityana MC  Budget Performance under Uganda Road Fund - Status of implementation - Routine manual maintenance - Routine mechanised maintenance - Inspection of Wabigalo- Busubizi Road (Status of Road) - The Poor state of Main Street - Lack of Road Equipment  Under Collection of Local Revenue  Comingling of Property Tax with other Revenues  Lack of a Valuation Roll for Property Tax  Irregular Allocation of Classroom Block to Pre Primary Section  Incomplete works on Pit latrine constructed at NAKASETA P/S  Un Distributed Youth Livelihood program Funds financial year 2017/18  Non functionality of the Stores system  Lack of an owned Office Premises  Understaffing  Management and Utilization of Natural Resources  Lack of Land Titles  Lack of inventory of wetlands (Un known wetlands)  Human Activities on Lake Wamala Buffer Zone  Garbage Management  Littering of Garbage  Absence of by-laws on Garbage Management  Failure to Maintain Data and Records on Garbage Volume  In appropriate Location of the Landfill  Lack of a Physical Development Plan 77. Kira MC  Implementation of the Uganda Road Funds  Under-funded emergency Road Works

256

 Fragmentation of Resources under Up-grading of un-paved Roads to Bitumen standard  Inadequate Road Equipment  Incomplete works - Construction of Kira MC Administration Building Phase II  Under staffing  Lack of Land titles for UPE Schools  Inspection of Primary Schools  Management and Utilization of Natural Resources  Failure to demarcate wetlands  Establishment of Urban Physical Planning Committees  Garbage Collection Management  Inadequate Garbage transportation equipment – Hiring of Equipment MASAKA BRANCH 78. Lwengo DLG  YLP-LOW Recovery Of Funds  Performance Of URF  Liabilities  Delayed Completion of valley tanks  Understaffing  Un demarcated boundaries of wetlands and forests.  Unlicensed activities on Natural Activities  Lack of sufficient funding to implement planned activities.  Underfunding of Nakateete Primary School  Poor Infrastructure of Nakateete primary School  Condition of Medical Equipment.  Understaffing at Lwengo Health Centre IV  Inadequate patients accommodation. 79. Sembabule DLG  YLP-Low Recovery Of Funds  Performance Of URF  Under Collection of Local Revenue  Unspent Conditional Grant  Under funding of YLP for 2017/18  Unlicensed activities on Natural Resources  Absence of a District Environment Committee

257

 Underfunding of St. Joseph Mateete Primary School.  Inadequate infrastructure of Mateete Primary School.  Poor Condition of Medical Equipment 80. Bukansimbi DLG  YLP-Low Recovery Of Funds  Performance of URF  Outstanding Commitments  Underfunding of YLP funds 2017/18  Occupation of office building under construction.  Unlicensed activities on Natural Resources  Failure to maintain prescribed records of Road equipment  Lack of Physical Planning Committee members  Poor condition of Medical Equipment.  Understaffing. 81. Masaka DLG  Performance of YLP  Performance Of URF

 Underfunding of funds 2017/18  Delayed access of the pension payroll by the retired employees.  Delayed disbursement of funds  Under Collection of Local Revenue  Management of Natural Resources  Absence of a District Environment Committee  Unlicensed activities on Natural Activities  Status of infrastructure at Lwagulwe Mixed primary school  Poor condition of Medical Equipment. 82. Masaka MC  Performance of YLP  Performance Of URF  Un demarcated boundaries of wetlands and forests.  Unlicensed activities on Natural Activities.  Irregular title by Kampala University  Encroachment on Plot 21, 23, 25,27, 29, 31, 33 and 35 Grant street.  Failure to obtain titles

258

 Irregular transfer of Council property by District Land Board  Failure to Vacate Council property. 83. Mubende DLG  Performance of YLP  Performance Of URF  Unspent conditional grants  Under Collection of Local Revenue  Excess funding of YLP- funds 2017/18  Summary of excepts raised in PPDA reports  Management of Natural Resources  Un demarcated boundaries of wetlands and forests.  Unlicensed activities on Natural Activities.  Underfunding of Bweyongedde Primary School  Status of Basic Medical Equipment.  Management of Road Equipment 84. Kalungu DLG  Performance of YLP  Performance Of URF  Under Collection of Local Revenue  Ghost schools receiving capitation grants  Underfunding disbursement of YLP funds.  Alteration of work plans without Council approval  Summary of exceptions raised in PPDA reports  Un demarcated boundaries of wetlands and forests.  Lack of sufficient funding to implement planned activities  Conditions of Medical Equipment.  Inspection of Bukulula Health centre IV 85. Rakai DLG  Performance of YLP  Performance Of URF  Unspent conditional grants  Under Collection of Local Revenue  Excess funding of funds 2017/18  Summary of excepts raised in PPDA reports  Un demarcated boundaries of wetlands and forests.

259

 Lack of sufficient funding to implement planned activities.  Lack of environment Committee  Underfunding of Kiwenda Primary school  Lack of adequate toilet facilities at Kiwenda Primary school.  Inadequate Medical Equipment at Rakai Hospital.

86. Kyotera DLG  Performance of YLP  Performance Of URF  Unspent conditional grants  Disbursement of YLP funds 2017/18  Un demarcated boundaries of wetlands and forests.  Unlicensed activities on Natural Resources  Lack of sufficient funding to implement planned activities.  Underfunding of Kyotera Central Primary School  Conditions of Medical Equipment at Kalisizo Hospital and Kakuuto Health Centre IV. 87. Mubende MC  Performance of YLP  Performance Of URF  Accumulation of domestic arrears.  Failure to receive funds of 2017/18  Un demarcated boundaries of wetlands and forests.  Unlicensed activities on Natural Resources  Understaffing 88. Gba DLG  Performance of YLP  Performance Of URF  Under Collection of Local Revenue  Un demarcated boundaries of wetlands and forests.  Unlicensed activities on Natural Resources  Lack of sufficient funding to implement planned activities. Capitation Grant  Underfunding of Bukandula Primary School Status of Basic Medical Equipment.  Conditions of medical equipment

260

 Understaffing at Maddu Health Centre Four  Understaffing 89. Kalangala DLG  Performance of YLP  Performance Of URF  Under Collection of Local Revenue  Lack of register for wetlands  Unlicensed activities of Natural Resources  Physical Planning Committee  Capitation Grant  Underfunding of Kibanga Primary School  Status of Basic Medical Equipment.  Management of Road equipment. 90. Butaleja DLG  YLP-low recovery of funds  Performance of URF  Pension Liabilities  Under-collection of Local Revenue  Lack of legal ownership of land, forests reserves  Non-existence of land office and staffing.  Unlicensed/illegal activities on Natural resources. Management of road equipment  Failure to maintain road equipment log sheets  Status of basic medical equipment  Condition of medical equipment  Competence of staff to handle medical equipment  Non disposal of obsolete equipment 91. Bukwo DLG  YLP-low recovery of funds  Performance of URF  Outstanding pension and gratuity  Under collection of Local Revenue  Staffing gaps  Status of the Medical equipment at Bukwo District Hospital  Non Existence of the District Environment Committee’s

261

 Absence of the Physical Planning Committee 92. Sironko DLG  YLP-low recovery of funds  Performance of URF  Pension Arrears  Under-collection of Local Revenue  Failure to assess and collect property taxes  Unlicensed activities on Natural resources  Performance of Physical Planning Committee 93. Namisindwa DLG  Performance Of URF  YLP-low recovery of funds  Unpaid salaries  Excess Expenditure  Understaffing  Construction of District administration block  Failure to conduct a comprehensive revenue assessment  Disaster management - Effect of Heavy rains  Lack of legal ownership of land, forests reserves and wetlands  Lack of a District Environmental Committee  Unlicensed activities on Natural resources  Failure to maintain road equipment records  Condition of medical equipment 94. Budaka DLG  YLP-low recovery of funds  Performance of URF  Budget Performance of Uganda Wen Entrepreneurship Programme  District Court Cases  Lack of Land Titles  Lack of legal ownership of forests reserves and wetlands  Unlicensed activities carried out in the gazetted wetlands  Inventory of Medical equipment  Competence of staff to handle medical equipment  Condition of the Medical equipment  Composition of Physical Planning

262

95. Bududa DLG  YLP-low recovery of funds  Performance of URF  Salary Arrears  Contingent Liabilities

 Inadequate maintenance of road equipment  Non-functional and non-existent medical equipment  Un-licenced mining and quarrying  Inactive District Environment Committee  Staffing and Human Resource Management  Understaffing  Un-reconciling enrollment figures  Lack of Land Titles  Non-disposal of Obsolete Assets 96. Bulambuli DLG  YLP-low recovery of funds  Performance of URF  Condition of medical equipment  Natural Resources  Lack of District Environment Committee 97. Busia DLG  YLP-low recovery of funds  Performance of URF  Failure to recover local revenue for Sub-counties  Poor Contract management  Unlicensed activities on natural resources  Failure to gazette land for wetlands and forests  Poor maintenance of medical equipment  Payment for unsuccessful repair of X-ray machine 98. Busia MC  Performance Of URF  Under-collection of Local Revenue  Status of Basic Medical equipment at Busia Health Centre I  Lack of an Urban Physical Development Plan

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 Budget for the Urban Physical Planning Committee  Lack of a garbage management system  Failure to maintain road equipment records  Non-disposal of obsolete assets 99. Butebo DLG  Performance Of URF  Local Revenue Shortfall  Failure to carry out local revenue enumeration and assessment  Absence of a District Environmental Committee  Unlicensed activities carried out in the gazetted wetlands  Lack of clear boundaries of wetlands  Lack of Financial Statements for Nasenyi Primary School  Inadequate supervision by district officials  Lack of District Physical Planning Committee  Encroachment on council land at Nasuleta Health Centre II 100. Kapchorwa DLG  YLP-Low Recovery of Funds  Performance of URF  Outstanding rent arrears  Missing vouchers  Failure to sign Financing agreements with Youth Groups  NUSAF Project Operations, shortcomings on Chebaser-kapkwateny car sub-project (road construction)  Unrealized Royalties Revenue  Outstanding Rent Arrears  Shortfall in Central Government Transfers  Staffing Gaps  Stalled construction of the new Administration Block  Status of Medical Equipment in the Hospital  Inadequate medical equipment  Failure to prepare defect reports  Defects on the construction of maternity ward in Tumboboi Sub-county  Lack of legal ownership of land, forests reserves  Absence of a Distinct Environmental Committee  Unlicensed activities on Natural resources

264

 Budget for the Physical Planning committee  Physical Planning Committee Performance 101. Kapchorwa MC  YLP-low recovery of funds  Performance of URF  Under-collection of Local Revenue  Unsupported/unauthorized supplementary budget  Understaffing  Lack of a physical planning committee  Lack of certified by laws on garbage management  Failure to undertake sensitization activities regarding garbage management  Inadequate facilities to collect garbage  Improper dumping of garbage  Lack of Local and Municipal Environment Committee’s 102. Kibuku DLG  YLP-Low Recovery of Funds  Performance of URF  Double transfer of UWEP funds  Staffing Gaps  Irregular Payment of Salaries to Retired Staff  Natural Resources  Lack of Certificate of Ownership of Wetlands  Unlicensed Activities in Wet Lands  Mismanagement of the District’s Natural Resources  Lack of Land Titles  Poor condition of medical equipment  Lack of skilled personnel to manage medical equipment  Non-disposal of obsolete equipment  Defects regarding the slitting, drilling and installation of bore holes  Failure to meet minimum required Standards of UPE School l  Evaluation of Internal Audit function 103. Kween DLG  YLP-Low Recovery of Funds  Performance of URF

265

 Under-collection of Local Revenue  Budget Performance  Lack of financial statements  Existence of land office and staffing  Absence of a District Environment Committee  Unlicensed activities on Natural resources  Composition of the district physical panning committee.  Non-existence of ophthalmic department  Idle Ultra Sound Scan  Inadequate medical Equipment 104. Manafwa DLG  YLP-Low Recovery of Funds  Performance of URF  Receivables  Unacknowledged erroneous transfer of funds  Unrecovered Loans  Late Release and Disbursement of Funds  School Facilities Grant (SFG) anomalies  Existence of land office and staffing  Lack of Local and District Environment Committees  Non-functional and non-existent medical equipment 105. Mbale DLG  YLP-Low Recovery of Funds  Performance of URF  Pension Liabilities  Procurements not reported to PPDA  Failure to fully implement the procurement plan  Budgetary Shortfall  Ineffective Land Board  Under realization of land fees

106. Mbale MC  YLP-Low Recovery of Funds  Performance of URF  Under collection of local revenue

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 Lack of certified by-laws on garbage management  Lack of appropriate garbage management equipment  Budgetary Shortfall  Lack of Local and Municipal Environment Committees  Asbestos roof  Inadequate desks  Lack of a land title  Inadequate staff houses  Under-funding of Physical Planning department 107. Pallisa DLG  YLP-Low Recovery Of Funds  Performance of URF  Receivables  Irregular Excess Expenditure on Councilors’ Emoluments  Inactive District Environment Committee  Un-licensed Activities on Wetlands  Inactive physical planning committee  Non-functional and non-existent medical equipment 108. Tororo DLG  YLP-Low Recovery Of Funds  Performance of URF  Transfers of UWEP funds to MoGLSD  Failure of council to sit in the whole financial Year  Non-operational district service commission  Lack of Local Environment Committees  Inadequate monitoring and supervision of the usage of Natural Resources  Existence of land office and staffing  Demarcations and size of the wetlands  Failure to report a fraudulent company to PPDA  Procurement not in the procurement Plan  Audit of SOP-SOP Primary School under capitation Grant  Inadequate ambulance services  Inadequate Health and safety measures  Status of the Basic Medical equipment  Understaffing  Failure to Implement Budget as approved by Parliament  Local Revenue Shortfall

267

 Revenue Accountability and contracts

109. Tororo MC  Performance of URF  Non-funding of the Physical Planning Committee activities  Failure to implement solid waste management strategy  Lack of a Proper Solid Waste Management System  Lack of appropriate garbage management equipment  Budget Shortfall  Inadequate monitoring and supervision of the usage of Natural Resources under the Municipal

MBARARA BRANCH 110. Mbarara DLG  YLP-Low Recovery Of Funds  Shortfall in central government grants  Mischarge of expenditure  Nugatory Expenditure  Irregular Payment of VAT  District Natural Resources  Delayed Modification Works on Defective Road Equipment  PPDA Findings 111. Bushenyi DLG  YLP-Low Recovery Of Funds  Performance of URF  Under-collection of revenue  Outstanding receivables not supported  Delayed Modification Works on Defective Road Equipment  Lack of Land Titles  PPDA Report  Legal ownership of land, Forests Reserves and Wetlands  Unlicensed Activities in Wetlands and Forest Reserves  Condition of medical equipment 112. Mbarara MC

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 YLP-Low Recovery Of Funds  Performance of URF  domestic arrears  under collection of revenue  shortfall in government releases  Inadequate medical equipment  Failure to Implement planned Output  Inadequate garbage funding  Inadequate equipment in garbage collection  Waste collection and transportation equipment as well as post plants not in place  Assessment of the Impacts of municipal solid waste activities on the environment  Other Challenges on garbage collection at the Municipal.

113. Mita DLG  YLP-LOW RECOVERY OF FUNDS  Staffing  Medical Equipment  Non-functional Medical Equipment  Lack of staff in the Natural Resources Sector  Unlicensed Activities on District Wetlands

114. Sheema DLG  YLP-LOW RECOVERY OF FUNDS  PERFORMANCE OF URF  Pension and Gratuity arrears  Under-collection of local revenue  Shortfall in Government grants  Audit of procurement of public works 6  Contract Awards that did not meet the evaluation criteria  Lack of evidence of receipt of invitation to Bid by bidders 7  Absence of a Physical Planner on the Physical Planning committee (PPC)  Budget Allocation to the Physical planning committee  Lack of a wetlands register

269

 Lack of key personnel in the Natural resources department  Lack of Basic Medical Equipment  Poor Condition of Medical Equipment  Non-maintenance of records  Safe Equipment operation practices  1nadequate capitation grant releases to the school 15

115. Sheema MC  YLP-LOW RECOVERY OF FUNDS  Garbage collection and Management 6  Lack of waste treatment facility and post plant  Lack of Physical planner in private practice  Physical planning committee  Unlicensed activities on Natural resources 116. Buhweju DLG  YLP-LOW RECOVERY OF FUNDS  PERFORMANCE OF URF  Pension and gratuity arrears  Un-supported Royalties received  Understaffing  Lack of legal ownership of land, forests reserves and wetlands.  Absence of a Distinct Environmental committee  Unlicensed Activities on Natural resources  Existence of Physical Planning committee  committee Performance  Capitation grant releases to schoo  Lack of Basic Medical Equipment l  Condition of medical equipment 117. Rubirizi DLG  YLP-LOW RECOVERY OF FUNDS  PERFORMANCE OF URF  Under Collection of Local Revenue  Unlicensed Activities on District Wetlands  Non-demarcation of Natural Resources

270

 Unlicensed activities on the crater lakes Inadequate basic medical equipment  Medical equipment due for service

118. Kanungu DLG  PERFORMANCE OF URF  Under Collection of Local Revenue  Lack of land titles  Capitation Grant not in agreement with Enrolment  Lack of Basic Medical Equipment  Poor condition of Medical Equipment  Lack of License to Operate Xray Machine in Kambuga Hospital  Non-demarcation of Natural Resources 119. Kisoro DLG  YLP-LOW RECOVERY OF FUNDS  PERFORMANCE OF URF  Under Collection of Local Revenue  Non deduction of Local Service Tax  Capitation grant releases to the school  Poor Condition of medical equipment  Unlicensed Activities on District Wetlands  Failure to demarcate natural resources  Lack of District Environment Action Plan  Failure to Fully Constitute a Physical Planning Committee

120. Kisoro MC  PERFORMANCE OF URF  Failure to Fully Constitute Municipal Council Physical Planning Committee (PPC)  Inadequate equipment for garbage collection and transportation  Waste treatment facilities as well as cpost plants not in place  Lack of garbage by-laws  Under-remittance of shared Local Revenue

271

121. Kabale DLG  PERFORMANCE OF URF  Pension liabilities  Unlicensed Activities on District Wetlands  Under-funding  Lack of Basic Medical Equipment  Medical Equipment in Poor Working Condition  Grounded road equipment

122. Kabale MC  PERFORMANCE OF URF  Under Collection of Local Revenue  Lack of land titles  Lack of a Wetlands Register  Unlicensed Activities on Municipal Wetlands  Lack of Essential Medical Equipment

123. Isingiro DLG  PERFORMANCE OF URF  Under Collection of Local Revenue  Unaccounted for Funds  Under collection of revenue  Lack of land titles  Land Encroachment  Under funding of Kyashojwa Primary School  Lack of a fully-fledged district lands office  Unlicensed activities on Natural resources

124. Ibanda DLG  YLP-LOW RECOVERY OF FUNDS  PERFORMANCE OF URF  Pension and Gratuity arrears  Understaffing  Inadequate medical equipment  Condition of medical equipment

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 Failure to demarcate Natural Resources  Construction of Mortuary and 2 stance VIP latrine

125. Ibanda MC  PERFORMANCE OF URF  Payables  Garbage Management  Inadequate garbage funding  Inadequate equipment and facility for garbage management 126. Rukungiri DLG  YLP-LOW RECOVERY OF FUNDS  Under Collection of Local Revenue  Unbudgeted Destic Arrears  Lack of legal ownership of land, forests reserves and wetlands  Unlicensed activities on Natural resources  Lack of up to date wetlands register  Non-Demarcation of Natural Resources  Inadequate maintenance of road equipment  Existence of Physical Planning Committee  Obsolete and faulty medical equipment  Lack of Basic Medical Equipment  Payroll  Understaffing 127. Rukungiri MC  YLP-LOW RECOVERY OF FUNDS  Under Collection of Local Revenue  Understaffing  Lack of legal ownership of land, forests reserves and wetlands  Unlicensed Activities on  Lack of Basic Medical Equipment Condition of medical equipment  Inadequate equipment for garbage collection  Lack of bye-laws regarding garbage management  Existence of Urban Physical Planning Committees  128. Rukiga DLG

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 PERFORMANCE OF URF  Under-collection of revenue  Shortfall in Grants and Other Transfers  YLP-LOW RECOVERY OF FUNDS 2017/185  Projects inspection – Youth Livelihood Programme  Ntungamo boda boda transport 5  Kishongati Soap and Cosmetics Project 5  Understaffing  Lack of legal ownership of land, forests reserves and wet lannds  Lack of a District Environmental committee  Unlicensed activities on Natural resources  Condition of medical equipment  Lack of Basic Medical Equipment 129. Rubanda DLG  YLP-LOW RECOVERY OF FUNDS  PERFORMANCE OF URF  Under Collection of Local Revenue  Revenue budget shortfall-central government grants.  Under-funding of the Natural Resources sector  Unlicensed Activities on Natural Resources  Absence of a District Environmental Committee  Inadequate Medical Equipment in Health Centre IVs  Lack of a Physical Planning committee  Management of Road Equipment  Delayed Modification Works on Defective Road Equipment 130. Kiruhura DLG  YLP-LOW RECOVERY OF FUNDS  PERFORMANCE OF URF  Non-maintenance of essential records  Capitation grant releases to school  Inadequate basic medical equipment  Failure to fully constitute District Physical Planning committee (PPC) 131. Ntungamo DLG  YLP-LOW RECOVERY OF FUNDS  PERFORMANCE OF URF

274

 Payables and pension liability  Emoluments to Councilors  Encroachment on Natural Resources  Condition of medical equipment  Grounded Road Equipment 132. Ntungamo MC  YLP-LOW RECOVERY OF FUNDS  PERFORMANCE OF URF  Shortfall in central grants releases  Encroachment on forest reserves and wetlands

133. Mbarara MC  YLP-LOW RECOVERY OF FUNDS  PERFORMANCE OF URF  Domestic Arrears  Under-collection of local revenue  Shortfall in Government Release  Inadequate medical equipment in Mbarara Municipal Council Health Centre IV  Failure to Implement planned Output  Inadequate garbage funding  Inadequate equipment in garbage collection  Waste collection and transportation equipment as well as post plants not in place  Assessment of the Impacts of municipal solid waste activities on the environment  Other Challenges on garbage collection at the Municipal. MOROTO BRANCH 134. Abim DLG  Performance of YLP  Performance Of URF  Accumulation of domestic arrears  Under Collection of Local Revenue  Failure to apply prescribed guidelines in operating road equipment  Lack of a Physical Planning Committee

275

 Failure to constitute a District Environmental Committee  Lack of a District Environment Action Plan  Lack of Register for Land, Wetlands and Forests  Unlicensed activities on the Natural Resources 135. Napak DLG  Performance of YLP  Performance Of URF  Accumulation of domestic arrears  Under Collection of Local Revenue

 Unrealised Budget on grants  Stalled Construction of Council chambers  Lack of land titles  Under Staffing  Failure to meet the Minimum Standards in UPE Schools  Lack of a District Environment Committee  Lack of Register for Land, Wetlands and Forests  Unlicensed activities on the Natural Resources 136. Moroto DLG  Performance of YLP  Performance Of URF  Accumulation of domestic arrears  Unspent balance  Irregular payment of night allowances to council members  Failure to apply prescribed guidelines in operating the road equipment  Failure to constitute a District Environment Committee  Lack of a District Environment Action Plan  Lack of Register for Wetlands and Forests 137. Nakapiripirit DLG  Performance of YLP  Performance Of URF  Domestic Arrears  Un-Spent Conditional Grants  Failure to Utilize Appropriated NUSAF II Funds

276

 Under Collection of Local Revenue  Abandoned Motor Vehicle  Irregular Sale of Solar Panels  Diversion of Council Assets to Personal Use  Grounded Motor Vehicles  Failure to access the payroll by new staff  Failure to access Pensions by Eligible Pensioners  Construction of an irrigation system  Un-demarcated Natural Resources  Illegal activities on gazetted natural resources  Failure to appoint a District Environment Committee  Lack of legal ownership of land, forest reserves and wetlands  Absence of a District Lands Office  Status of health facilities  Shortage of Medical Equipment  Medical equipment in poor working condition  Under Staffing  Failure to appoint Contract managers/supervisors 138. Kaabong DLG  Performance of YLP  Performance Of URF  NUSAF3 Implementation  Delayed disbursement of funds to groups  Delayed implementation of NUSAF 3.  Doubtful transfer of UGX. 3,333,857,143  Medical Equipment  Lack of a medical equipment inventory  Shortage of Medical equipment  Management of Natural Resources  Un-demarcated Natural Resources  Unlicensed activities on Natural resources  Absence of a District Environmental Committee 139. Moroto MC  Performance of YLP

 Performance Of URF

277

 Under Collection of Local Revenue  Uganda Support to Municipal Infrastructure Development Programme (USMID)  Diversion of UGX. 113,148,947  Unbanked Local Revenue  Over expenditure regarding PERFORMANCE OF URF operations  Irregular award of road rehabilitation Contract UGX.430,379,418  Direct Procurements worth UGX 35,000,000  Acquisition of land without Technical input of the Chief government Valuer  Failure to avail work plans and budgets for USMID expenditure  Failure to account for funds on a quarterly basis using the prescribed forms  Un-availed USMID Procurement Files  Failure by Moroto Municipal Council to develop by-laws on garbage collection SOROTI BRANCH 140. BUKEDEA DLG  Performance of YLP  Performance Of URF  Pension and Gratuity Arrears  Un-Spent Conditional Grant  Reconciliation of Central Government Releases  Salary Arrears  Lack of Annual Budgets by Primary Schools  Dilapidated school Accommodation and Classroom Structures  Poor pupil to facilities ratio  Unlicensed activities on Natural resources  Shortage of medical equipment at the health facility  Non-Functional Medical Equipment  Idle and non-functioning dental machine 141. DOKOLO DLG  Performance of YLP  Performance Of URF  Pension and Gratuity Arrears

278

 Under Collection of Local Revenue  Reconciliation of Central Government Releases  Accumulation of Arrears of Revenue  Un remitted Payroll deductions  Under Staffing  Audit of UPE Schools  Delayed Release of Approved funds 2017/2018  Lack of legal ownership of Forest reserves and Wetlands  Unlicensed Activities on Natural Resources  Shortage of Medical Equipment at Dokolo HC IV  Inadequate availability of protective wear  Absence of district physical planning committee 142. KATAKWI DLG  Performance of YLP  Performance Of URF  Accumulation of Domestic Arrears  Unrealized Budgeted Revenue  Un-Spent Conditional Grants  Capitation grant - Lack of Financial Statements  Lack of Basic Medical Equipment in Health Facilities  Failure to supply ordered Medicines  Drug Stock Outs  Existence and Performance of Physical Planning Committee  Absence of District Environment Committee  Lack of a District Environment Action Plan 143. KABERAMAIDO DLG  Performance of YLP  Performance Of URF  Salary and Pension Arrears  Payment of avoidable court awards  Un-Spent Conditional Grant  Under Staffing  Delayed deletion of retired/dead staff  Capitation Grants in UPE Schools  Non-disposal of obsolete Assets

279

 Lack of the district environmental committee  Unlicensed activities on Natural resources  Shortage of medical equipment at the health facility  Inadequate availability of protective wear  Lack of skilled personnel to operate specialty equipment  Absence of district physical planning committee 144. KUMI DLG  Performance of YLP  Performance Of URF  Domestic Arrears  Under-collection of Local Revenue  Pension and Gratuity Arrears  Revenue Budget Performance  Under Staffing  Lack of Capacity to Develop Prime Land  Poor Pupil to Facilities Ratio in Primary Schools  High Number of Court Cases and Contingencies  Delayed Release of Approved funds for 2017/2018  Lack of Legal Ownership of Forest Reserves and Wetlands  Unlicensed Activities On Natural Resources  Shortage of medical equipment at the health facility  Inadequate availability of protective wear 145. NGORA DLG  Performance of YLP  Performance Of URF  Under Staffing  Construction of a 4 in 1 Staff House at Aciisa Primary School  Delayed release of approved funds 2017/2018  Lack of Annual Work Plan and Annual Budget by Primary Schools  Failure to Conduct Termly Stock Counts and Maintain Inventory Cards  Unlicensed Activities on Natural Resources  Lack of Legal Ownership of Forest Reserves and Wetlands  Shortage of medical equipment at the health facility  Inadequate availability of protective wear 146. OTUKE DLG  Performance of YLP

280

 Performance Of URF  Unsupported Pension and Gratuity Payments  Revenue Budget Performance  Under-collection of Local Revenue  Under Staffing in Orum HCIV  Poor pupil to facilities ratio  Lack of legal ownership of Forest reserves and Wetlands  Unlicensed activities on Natural resources  Shortage of medical equipment at the health facility  Lack of Budget for the Physical Planning committee  Revenue generated by committees  Lack of Safe Work Procedures for the road equipment  Procurement Compliance review by PPDA 147. SOROTI DLG  Performance of YLP  Performance Of URF  Under-collection of Local Revenue  Revenue Budget Performance  Un-Spent Conditional Grant  Pension and Gratuity Arrears  Lack of Land Titles for the District Land  Under Staffing  Minimum Infrastructure Requirements at the Schools  Poor pupil to facilities ratio  Delayed Release of Approved funds for 2017/2018  Budget Performance UWEP  Unlicensed Activities on the Natural Resources  Lack of Medical Equipment  Non Functioning Medical Equipment  Failure to allocate funds to the Physical Planning Committee 148. SERERE DLG  Performance of YLP  Performance Of URF  Under-collection of Local Revenue  Unbudgeted Domestic Arrears

281

 Understaffing  Encroachment on Forests Reserves  Lack of proper demarcation of Natural resources’ boundaries  Status of basic medical equipment in Serere HC IV  Capitation Grant 149. SOROTI MC  Performance Of URF  Revenue Budget Performance  Mischarge of Expenditure  Un-Verified Pension and Gratuity Payments  Un-Spent Conditional Grant  Budget performance  Uganda Support to Municipal Infrastructure Development Programme (USMID)  Lack of a Municipality Environmental Action Plan  Lack of proper demarcation of Natural resources’ boundaries  Carrying out illegal activities on the Wet lands  Lack of Register for Wetlands and Forests  Status of Medical Equipment at Princess Diana IV  Budget for the Physical Planning committee  Lack of Bye-Laws Regarding Garbage Management  Insufficient equipment/facilities to collect garbage  Capitation - Failure to prepare Termly Financial Statements  Poor pupil to facilities ratio

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ANNEXURE V: REPORTS AND CONSOLIDATED GOVERNMENT OF UGANDA FINANCIAL STATEMENTS

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